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Thursday, 12 May 1994
Page: 796


Senator HILL (Leader of the Opposition) (7.31 p.m.) —I am pleased to respond tonight on behalf of the opposition to the budget statement as put down in this chamber by the Minister for Industry, Science and Technology, Senator Cook. I have decided to take as my theme the following words: `Those who preach stationary-state politics preach a cruel epistle.' Those words were spoken by Paul Keating in 1985, and in many ways, I think, they reflect the Keating government's budget of 1994-95. I repeat the words: `Those who preach stationary-state economics preach a cruel epistle.'

  In many ways, we see this budget as an abdication of economic management, yet again based, we believe, on serious errors of judgment. As so many have said, it is more of a gamble than a plan: a gamble that business will invest at a record rate, up to 14 1/2 per cent from what is now a record low rate of just one per cent; a gamble that interest rates will not rise when they are already starting to rise—and we remind the government again of that which it always seems to forget, that real interest rates in this country are already high; a gamble that inflation will be contained, even though the budget papers forecast an upward trend; a gamble that the current account will not blow out again, although we already have a deficit this year of some $17 billion and the forecast for the budget year takes it up to $18 billion; a gamble that the economy will grow at a record rate and that the growth will be sustained through the balance of this decade; a gamble that we will not return to the boom-bust cycle of the past; and perhaps the greatest gamble of all, that new, real jobs will be created out of an expanding economy to address the greatest tragedy of the Keating government, of Mr Keating's personal hand on the tiller, that is, nearly a million Australians unemployed and many more thousands underemployed or having given up looking for work.

  It is no surprise that, when pressed yesterday, Mr Willis hesitated on the business growth projections because his own department, as we found in question time yesterday, has refused to put its reputation on the line on Mr Willis's business growth figures.

  It is also no surprise that he hesitated on the job growth projections. Already we have had figures from this government ranging from an expectation of 1.4 million jobs through to 2 million jobs—a 40 per cent difference between ministers over a few days. It is possible for the government to estimate the temporary jobs that can be created, in effect, purchased by its white paper, its new training scheme; but in relation to real jobs, sustainable jobs, ongoing jobs, all the government can really do, and all it really does, is just hope.

  It is also important at the outset to understand that this is the first budget drawn in consultation with the minor parties of this parliament, and in particular the Australian Democrats. They joined with their soul mates, the Australian Labor Party, in drawing a framework for this budget that they, the Democrats, could accept. They must remember that they are a party to all the shortcomings of this document.

  It is too late for the Democrats to squeal. They have shown their colours. They have clearly identified themselves as in Labor's camp—referred to fondly by some of my colleagues as the fifth faction of Labor; but of course in doing so the Democrats let down those of their supporters who still believed that they were really independent. It is now too late—the Democrats are clearly in bed with Labor and they must also be branded with the shortcomings of this budget.

  The Democrats have locked themselves into Mr Keating's package. As he said to us some time ago, he wanted the job of Prime Minister because he would then have his fingers in all the policy pies. You will remember, Mr President, that what we were expecting, what we had been told we were going to get was a separate regional statement—something that would address the major difficulties that are being faced in regional Australia under Labor: the loss of jobs; the loss of opportunity; and the run-down of infrastructure.

  Mr Kelty was one of those who wrote the paper. I do not often quote Mr Kelty but he put it in these terms:

I mean we're talking about a country which is growing. In order to grow you've got to have infrastructure. All we've done is wound down infrastructure investment in this country.

He was talking about regional Australia. He was saying that the Labor government has to address a constant wind down of infrastructure, which is the basis of a competitive economy and therefore jobs out in the region.

  Secondly, we were expecting a separate industry statement because industry policies had been very much the Button plans. Senator Button had gone, his plans had served their time, the government had not developed a new industry agenda at the time of the last election, as we all knew—we expected that to come out of a separate policy document. Of course, Labor went through the embarrassment of Mr Griffiths and the sandwich shop affair and was unable to produce the promised industry statement.

  Thirdly, we were told that we were going to get a new agenda, new hope for the almost 400,000 long-term and very long-term unemployed in this country—the highest figure since records have been kept. And they were certainly expecting more than just another training scheme. But rather than have these statements delivered by others, Mr Keating joined them together in his typical way, wanting to outbid even Chifley with a multi-billion dollar trainee scheme, which he has labelled falsely but grandly a jobs compact. A jobs compact gives the impression that there is something that will be ongoing—that the out of work Australian, having made his part of the compact, can expect something that is ongoing.

Again, Mr Keating, as he so often does, raises unreal expectations, only to disappoint again in the future. It left Mr Willis with little. All he could really do on budget night was announce the funding base for this new expenditure, and that we now know is the gamble on growth.

  The problem is that Mr Keating's record gives no basis for confidence. When the budget is a gamble and the bet is on Mr Keating's judgment, one is entitled to have little confidence in the outcome. We must always remember that this is the same Mr Keating who once said the J-curve would be our `export salvation'. That is a quote. When it did not work, what did he say? He then said, `It is not that the J-curve effect is not there; it's being asked to do too much.'

  That is absolute nonsense. It is the same Mr Keating who said that he was holding the levers of power `in comfort' and then gave us the worst recession in 60 years. It is the same Mr Keating who said in 1985, `The government is not going to tolerate any section of the community destroying the prosperity of the Australian economy.' A few years later he came back to us and said, `This is the recession Australia had to have.' What was it that destroyed the prosperity of the community? It was government policy itself. It is the same Mr Keating who, in 1989, argued that surpluses were the rock that the economy was built upon. In 1992, when it was unsuitable in those times, he said, `Since when do we have to go back to surpluses? Since when were they holy writ?' It is the same Mr Keating on inflation. When he came to the task of fighting inflation he found it too hard, and he said in 1983, `Fighting inflation first is frankly a failure and frankly we have got to ditch it.' In 1985 he was still not doing well on inflation and he said, `We will not sacrifice growth in this economy on some altar for some idolatry on inflation and monetary growth that has no basis in fact.'

  When in fact Mr Keating's own recession destroyed inflation, he came back boasting, `We have broken its back. Now we have got to keep it broken.' Those are the constant inconsistencies. It is the same Mr Keating who at one moment argues, `It is production, not spending, that generates jobs', and then last week produces his answer to unemployment—a $6.5 billion spending package. It is the same Mr Keating who a few years ago described the concept of enterprise bargaining as a joke.

  Mr President, that is not leadership. Where is the leadership in this budget? Where is the hand on the tiller? It is simply not there. Very briefly we will look at the income side of the budget. PAYE and personal taxes are to go up eight per cent. Remember the March 1992 statement from Mr Keating on bracket creep? He said it was gone forever. He said, `We will return to taxpayers the impact of inflation—even low inflation—on the tax system.' Now, bracket creep is back again and the tax take from the people is on the rise again.

  The second tranche of tax cuts promised at the last election—sorry, not promised; l-a-w, law—are farther away than ever. Senator Gareth Evans said today that perhaps it would be in 1998. They are so far away that no-one can take them seriously. I remind the Senate that the wholesale sales tax goes up one per cent in July 1995. Many in the community have forgotten, but we will remind them, that these tax increases were legislated out of a deal done between the government and the Australian Democrats, and the Australian people are going to suffer the consequences of that deal during the course of this year.

  In August fuel taxes go up, and in July 1995 sales tax goes up, and so it goes on. Taxation on superannuation funds is up 27 per cent. Receipts from fringe benefits taxes—so complex apart from the income that they generate—are going up a massive 131 per cent. Wine tax goes up again. I think Senator Kernot would have conveniently forgotten that one. So it goes on.

  The government comes in and says, `This is not a budget about increased taxation.' Those opposite particularly want to take note that again it is the tax on lower income earners that rises disproportionately compared with the tax on higher income earners. This is all part of Labor's new definition of social justice.

  What happens on the expenditure side of the budget? With a typical Labor government, the budget cruises along, taxes go up, expenditure goes up another three per cent and the running costs of the public service increase by another $1 billion.

  When expenditure goes down, who has to make do? The answer is that the states again have to. Money being appropriated to the states goes down in real terms by about five per cent, and they are again expected to provide more services with less money. Incomprehensibly, road funding goes down. On the one hand, the government says it is wanting to create an export culture and then, on the other hand, it reduces funding for roads, which are a necessary part of the infrastructure to develop a competitive export economy. It is just incomprehensible.

  The other part that stands out in this budget is the borrowings. Again, one might say this is typical of Labor. Over the next three years Commonwealth public debt will treble, from $30 billion to approximately $90 billion. This is a staggering and, I would have thought, in anyone's language, a highly worrying increase.

  What is happening, of course, with this budget is that the farm is being sold off to pay for recurrent expenditure. It is not being done to retire debt, which was our plan—a responsible plan—but rather assets such as the Commonwealth Bank, the AIDC, and airports in due course, are being sold off to pay for the government's recurrent debt. Taxes go up, borrowings are massively increased, and, of course, it simply goes in the year's running costs. What is the outcome? A higher interest bill and higher capital debt that has to be repaid in the future.

  Any small business man or woman would tell us that they would not survive on that recipe. But that is the formula that this government is giving for the management of the total Australian economy. That is why we say that the hands have left the tiller and this is not sound management. It is not the sort of economic framework that would give business the confidence it needs to invest, to grow and to employ. That is why we doubt that the government's predictions on business investment will be met.

  Everyone knows that one of the major problems of the Australian economy is low savings—savings that would be invested in productive enterprise. How will massive new government borrowings to repay recurrent expenditure help build the necessary capital for investment in the private sector? Of course, they will not help. Those on the other side might like to reflect that, interestingly, this policy approach contrasts dramatically with what we put to the Australian people at the last election. Our alternative would have obviously built a stronger economy.

  On the subject of contrast, by 1996-97 Labor will have collected as much indirect tax as the coalition would have gained from a GST—but without the compensation to low and middle income earners. Oh, how the electors were conned at that last election! Mr Keating, only two days after the election and in his usual rewriting of history, said, `This was not a referendum on the GST; it was a referendum on the way Australians lived.'

  In no small part because of this government's poor budgetary management—and also because it is in debt to sectional interest groups, particularly organised labour—Australians have not lived too well under Mr Keating. Not only do we have the appallingly high unemployment and underemployment figures, but household disposable income is lower now than it was under the coalition. Senator Murphy should reflect on that. Household disposable income was 3.5 per cent when the Labor Party came to office. The average of household disposable income over the last 11 years—what people can spend—is a measly 1.3 per cent. Growth in average weekly earnings, of course, has been lower again under Labor.


Senator Murphy —Not as low as you wanted to make it.


Senator HILL —Our foreign debt per capita has risen to almost the highest in the world. What a record! Again, Senator Murphy should think about that. Does he realise that the incomes of the lowest 20 per cent of the population have fallen and that the incomes of the highest 20 per cent of the population have risen? That is Labor: the rich have got richer and the poor have got poorer. What a boast!

  Going to the future, what is there in this budget—against this background of missed opportunity; this failure to really tackle the deficit when the opportunity was there—that tells us that interest rates will not rise again? It should be remembered that it was so few years ago that they reached a record 20.5 per cent nominal rate under Mr Keating's policies. Why will it not happen again? Why will imports not be sucked in again and the current account deteriorate further? The clamp is put on again; there is more suffering, more bankruptcies and more of the same that we have received for 11 years. All the signs of the `boom, bust' cycle are there and that it will occur again.

  Community surveys indicate that the public does not have confidence in Labor's economic management, and they are right. Australians were told in the budget statement they could look forward to the future `with considerable confidence'. Australians remember that it was the 1988 budget which `brought home the bacon'; the 1989 budget which was the gimmicks budget; the 1990 budget which was said to be the `Rolls Royce of budgets'; and the 1987 budget was the one with the rabbits falling out of the hat. The 1988 May statement was a `milestone in the transformation of the Australian economy', and the 1987 May statement maintained that Australia was `winning'—just before the stock market crash.

  Australians have heard it all before. They are sick of the exaggerations, the ducking and weaving and the self-praise. What they want is sound economic management and jobs, not just fast talk. Labor, under Keating, is not what it used to be. It is more exclusive rather than inclusive. It is more concerned with the privileged than the underprivileged and it is certainly no longer—if it ever was—the champion of the underdog. Keating, dripping with the trappings of power, talks about what we now have as a civilised Australia. He should be telling that to the unemployed, the dispirited, the homeless, and the Aboriginals living in Third World conditions.

  We have a different definition of a civilised society from that of Mr Keating. Under our model, a civilised society recognises individuals and encourages self-growth. It does not fear differences but is strong enough to be sensitive to the needs and suffering of others. A civilised society offers the caring hand to allow individuals to develop their potential within a positive framework which, in the end, helps society as a whole to grow stronger and more resourceful.

  Our vision is one of a team working together. All members have their own strengths, which they develop and use to assist other members of the team to work more effectively and more productively. In this `recession we had to have', 500,000 jobs have disappeared and over one million Australians have suffered. There are now more of us depending on fewer of us than ever before in the history of this country. Australia has changed, but it has not necessarily changed for the better. It is now time for there to be some real leadership in this country.

  To go back to my theme, this budget was a chance for the government to set an economic framework that could have made a real difference. This government missed the opportunity. As Mr Keating said in 1985—he ought to be reminded of this; if he ever listened to anybody, he is probably the only person he would listen to—`Those who preach stationary-state economics preach a cruel epistle.' Mr President, it is time that all Australians were given a fair go.