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Wednesday, 11 May 1994
Page: 632

Senator PARER —My question is directed to Senator Cook in his capacity as Minister for Industry, Science and Technology and also as the Minister representing the Treasurer. The scourge of the 1980s was the current account deficit which the government sought to control by increasing interest rates to reduce imports but which resulted in Mr Keating's recession we had to have. In last night's budget the Treasurer forecast the current account deficit would once again blow out—this time to $18,000 million. Will the government rule out again using higher interest rates to control imports? If not, what other mechanisms will the government use to limit imports of consumption goods?

Senator COOK —This is a weird question coming from the opposition which has spent so much time belabouring the budget on the basis of the predictions for increased investment in the Australian economy. One of the things that the Treasurer has been constantly saying—maybe the opposition has not been listening; it has simply been chanting slogans and not taking in the information—is that we are on the verge of an uptake of investment in the Australian economy. Because of vacant office space in capital cities caused by an over-investment in office capacity in Australia, the round of investment that we saw coming through in last week's balance of payments figures, and anticipated to continue in forthcoming balance of payments, means investment in plant and equipment, investment in computing technology and investment, as we saw in the last balance of payments, in transport goods other than aeroplanes and passenger motor vehicles.

  All of those things are investments which do push the current account deficit out, and that is acknowledged in the budget. But it is the up-front cost that is paid in order to replenish the productive capacity of plant and equipment and industry production around Australia that leads to greater production and greater growth.

  Senator Parer asked me whether the government was going to do this or that. He knows I will not speculate on interest rate movements. However, Senator Parer ought not try to misuse the figures about the changes in the balance of payments because of his transfixion on that figure and not recognise how it plays into the wider game of broader investment and increased productive capacity in the economy adding to growth and jobs.

Senator PARER —Mr President, I ask a supplementary question. Is not the minister really saying that this government has absolutely no policy to address the serious current account deficit blow-out and thus the burgeoning overseas debt?

Senator COOK —This is amateur hour or Perry Mason out in the sticks. This is not a yes or no answer. Senator Parer spent some time in industry and he knows that. We do have a strategy, of course—the commitment that we laid down in the white paper just last week, which was the most recent reiteration of our strategy for growth, and supported by the budget last night. That is a strategy of improving the productive capacity of Australia, adding to the already rapid expansion of elaborately transformed manufacturing exports, adding to the already high growth in sophisticated service exports, and turning around the current account because we are building a stronger and more competitive international economy. Senator Parer knows that is the argument. He should not play funny games with statistics, pretending that he has a case. He knows as well as I do that he has no case.