Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Wednesday, 1 June 1994
Page: 1087

Senator SHORT (3.40 p.m.) —by leave—I move:

  That the Senate take note of the document.

The Minister for Small Business, Customs and Construction (Senator Schacht) has just tabled the various corrigenda to the portfolio budget measures statements relating to a range of government departments. The reason for the budget statements in the first place relates to the government's economic policy, and in particular, flows through that to the government's bottom line on its figuring—the budget deficit. That is an issue that is of considerable importance at the present time and is very highly relevant to the figures that were released today, the national accounts results for the March quarter of this financial year and which, as I understand it—although I did not see the press conference—the Prime Minister (Mr Keating) described as `profoundly significant' results.

  First, I welcome the growth that was recorded in the March quarter figures that were released today, but when I come to look at the Prime Minister's description of them as being profoundly significant, I would use those terms in quite the opposite sense from the way the Prime Minister used them. If we look at the facts behind today's national account figures—and I am sure Senator Watson agrees with me—we find some results that are profoundly significant because they are quite disturbing.

  The results for the March quarter showed an increase in average gross domestic product of 1.9 per cent. As I said, that is a good figure but it is the underlying figures that are important. I point out in referring to the 1.9 per cent that on trend estimates the figure is only 1.2 per cent. It is the composition of the figure that is all important. So far as the contribution to that 1.9 per cent is concerned, government consumption made up 1.2 per cent of that 1.9 per cent. In other words, well over half the increase occurred through government consumption. Private consumption was a contribution of only 0.8 per cent.

Senator Schacht —That is only to be expected, coming out of a recession.

Senator SHORT —I thought the government had been trumpeting the fact that economic recovery was under way and that it was the private sector that was really lifting everything off. We find that government consumption has contributed 1.2 per cent of the 1.9 per cent and private consumption, consumption by ordinary Australians, was only 0.8 per cent. In other words, the government's pump priming contribution to growth was half as much again as consumption by ordinary Australians. That is significant, in its own right.

  What is also profoundly significant—and I use the term `profoundly disturbing'—are the figures in relation to business investment, because it is business investment which is the engine of growth, job and income creation, and living standards in this country. Business investment in the March quarter contributed 0.4 per cent to the 1.9 per cent growth in GDP—only about one-fifth of the growth that occurred in the economy.

  In other words, there was no real growth where it really counts, in the private sector. Business investment languished—and I will come to more detailed figures in a moment—and private consumption was exceeded by government consumption by half as much again. Let us look at the business investment contribution of 0.4 per cent. The actual growth in business investment in the March quarter, according to the statistics, was 4.4 per cent. On the face of it, that does not look all that bad; but, when we look at the trend figures for investment, far from an increase, there is a decrease of 0.6 per cent.

  So business investment, on trend, fell in the March quarter. Even if we accept the 4.4 per cent, when we look at the composition we find that investment in private new equipment, which is really the fundamental part of private sector investment, fell by 6.8 per cent. It was only the purchase of the Gladstone power station from the Queensland government which, in itself, is just a total transfer—at a very extensive investment figure of $700 million plus—that provided any increase at all in the published statistics for investment in the quarter. That has to be discounted in a meaningful sense because it is a complete distortion of the figures.

  The business investment outcome figures for the March quarter are not good—I would say they are bad. There are no signs at all of any sizeable or sustainable increase. Again, to use the Prime Minister's words, that is `profoundly significant', but I use that term in completely the opposite sense to which the Prime Minister used it today. Without investment there can be no lasting economic growth, no new jobs, no improvement in living standards, and no hope for the millions of Australians who are still suffering from the hardships of the government's record of abject failure in managing the economy.

  The other statistic today in the national accounts figures that is profoundly significant and profoundly disturbing is the savings figure. According to the government's own figures released today, household savings in the March quarter fell to 3 1/2 per cent of household disposable income. That is the lowest figure for household savings that has ever been recorded. It is just one-third of the savings rate that existed when this government came to office.

  It is no wonder that with negligible savings and continuing disastrous private investment outcomes there is increasing concern in wide sections of the community—and now it seems within the government's own ranks—about Australia's foreign debt mountain. On a per capita basis it is far and away the largest of any country on earth.

  We have a debt now of more than $200,000 million—an absolutely mind boggling figure. There are so many noughts that people just do not comprehend it. It is seven times higher than it was when Labor came to government. It is no wonder the community is concerned about the $18,000 million we pay foreigners each year in interest payments before we start paying off any of the $210 billion in debt. We pay $18 billion just in interest. We are paying that interest on an ever-increasing debt.

  Indeed, if interest rates had not fallen internationally in the way they have in the last year or so, the figure would be even higher than $18 billion. It will be even higher in the future for two reasons: firstly, interest rates are going up again around the world, so we will be paying higher interest rates on our borrowings; and, secondly, our debt is getting bigger, so we will be paying interest on a higher level of debt. They are matters of great concern because they determine the future wellbeing of this country.

  What those figures show us very clearly is that we are going down the drain day by day, week by week, month by month and year by year because we are not able to pay our way in the world. It is no wonder that Australians are so profoundly and rightly concerned that interest rates are about to rise again. This government has deliberately chosen to pursue a policy which again puts at risk Australian families' homes, their businesses and their jobs. It is no wonder that the community is concerned that the government has not learnt from its tragic record of boom-bust that has cost all Australians so dearly.

  The government seems to have forgotten the warnings given to it by the Treasury and contained in its own budget documents presented to the parliament just three weeks ago. The Treasury warned in chilling fashion, very clear, very stark that:

  The build-up of external debt during the 1980's has almost certainly imposed costs on the economy, including through increased interest rates and greater vulnerability to external shocks.

Nothing could be clearer than that. The government's policies have put Australia in a very fragile situation. The coalition has been asking the government for years, and not getting a meaningful response at all: why has the government deliberately chosen to embark on a policy course that has so undermined Australia's economy and, through that, its sovereignty and independence—because nothing can be more of a determinant of a nation's independence than its economic place in the world—and left us so dangerously exposed to the boom-bust economic cycles of the past?

  We read in today's papers that the Prime Minister told his caucus yesterday, `Don't worry. That foreign debt isn't all that bad. You don't really have to worry about it. We are going to produce a paper that will explain it all,' and that will wish it all away. Does the Prime Minister seriously expect that a paper on debt, drafted by compliant advisers in his own offices and the personal offices of the Treasurer (Mr Willis), will, like some Canute, hold back the flood of legitimate concerns about these fundamental issues? The answer quite clearly is that that is not the real world.

  Peter Walsh, the former finance minister, used to talk about the Australian Democrats as the fairies at the bottom of the garden, and he was right, somewhat surprisingly. But he withdrew that criticism of them in recent months. I think he passed the epithet across to the Western Australian Greens. What he should have done was pass it to the Prime Minister, the Treasurer and the government of this country. Because if the Labor Party believes that the policy it is deliberately pursuing to run this country into ever increasing debt and ever increasing loss of independence and sovereignty is the way to go, then of all the parties in this land the Labor Party is the fairies-at-the-bottom-of-the-garden party. The great cost and tragedy is that every Australian will be the loser as a result.