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Wednesday, 1 June 1994
Page: 1091

Senator O'CHEE (4.05 p.m.) —I wholeheartedly support the comments made by Senator Short and Senator Watson today in the debate on these documents. In this country we see foreign debt totally out of control. When I came into this parliament four years ago I came from a bank that specialised in Latin American debt. I am now in a parliament which seems to specialise in debt of Latin American proportions. We see that this government has no measure in its economic strategy which will deal with the burden of foreign debt. Foreign debt will be a burden not just on this generation of Australians but on succeeding generations of Australians.

  Like other opposition senators, I was shocked to hear Senator Evans say in the parliament today that there was no reason for concern over the foreign debt because, he told us, it was buying assets that would produce a return that would pay the interest. This is a variation on the argument we heard from Senator Button, that there is no need to worry because we can pay the interest. Of course, there is no proof that these assets can pay the interest; in fact, there is every reason for us to believe that the Australian population is being asked to swallow exactly the same excuses as were offered in Brazil, Argentina and other Latin American countries when everybody there believed, without any dissent, that they would be capable of paying the interest on the debt. One day they all woke up and realised that they could not.

  We have to kick the public off the foreign debt serpent, and that is exactly what it is. It is a serpent that will come around to swallow the Australian economy. Our net foreign liabilities are now in the vicinity of 57 per cent to 58 per cent of GDP if we believe the figures in the budget. The disturbing thing is that this year alone the Australian economy will bleed—and `bleed' is the word—$18 billion in interest payments on the $200 billion of debt which we have clocked up. Of course, we could just add those interest payments to the foreign debt we will have at the end of the year because the Australian economy, whilst running a balance of payments deficit, will ultimately be incapable of paying that interest, so much of it will be rolled over in the same way in which this government, which is bankrupt morally and financially, is having to roll over its own debt. And so it piles up and up.

  Senator Watson made some very perspicacious comments in relation to our sovereignty. Our sovereignty is at risk from this foreign debt. We should look at the debt legacy that the Victorian government was left with as a result of Cain and Kirner destroying the economy of that state. We saw the Premier of Victoria having to go on bended knee to the bankers in New York to plead for the debt rating of his state. Whenever one is so beholden to other lenders, or so beholden to the credit rating agencies which ultimately determine one's interest rate—because if they do not like you they downgrade your debt, and when the debt is downgraded the interest payments go up—one does not have the freedom to run the economic policy one wants. The economic policy is run the way they want, or the debt is downgraded. This is the danger facing this country.

  It is wholly unacceptable for the government to say, `Look, the private sector has gone and borrowed this money.' Of course the private sector went and borrowed the money. The private sector had to go offshore because the savings base in this country has dwindled away to nothing. If there is to be an investment recovery whilst this government takes $20.4 billion this year out of the money market through its public sector borrowing requirement, there will be an increasing tendency for borrowers to go offshore.

  Here is the government saying, `Look, we will borrow $20.4 billion this year' at the same time expecting business to increase its investment over 16 per cent and take the money for investment from the same pool that the government is robbing with the public sector borrowing requirement and its three- to 10-year bond raisings. It is obvious that that money will be found offshore if it is to be found at all. Either the government will be very short on its budget estimates, or the estimates will be met through massive increases in foreign borrowings. Neither is acceptable to the Australian people.

  Whether it is the private sector or the public sector that is responsible for the particular loans in question, the government has culpability over both hands. The government has culpability over all of them, because all the people on that side are morally bankrupt when it comes to running the country's economy. What we will see increasingly is the decisions on our economy, our future, our social programs, our programs for development, not being determined here in Canberra, not even being determined in the boardrooms of Sydney, Brisbane and Melbourne, but being determined in rooms in other countries on the other side of the world. That is the legacy that Australia has from these years of Labor government—a legacy of bankruptcy. It ought to rise in the throat of every Australian that this is the truth about the great economic miracle that those people on the other side of the chamber proclaim to us. It is nothing but a fraud and it will come back to haunt succeeding generations of Australians.

  Question resolved in the affirmative.