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Wednesday, 22 June 1994
Page: 1852

Senator WATSON (12.45 p.m.) —I wish to take this opportunity to draw attention to the government's failure to stick to its own stated aims in terms of the deficit. Last year we heard a lot of rhetoric about the government being committed to a deficit reduction strategy. I remind the Senate that the government is moving away from those undertakings very strongly, particularly in relation to last year's budget.

  It appears that in the current year the government is about to spend over $13 billion more than it collects in revenue. The recent budget estimates for 1994-95 have predicted that it will again enter the same sort of fiscal irresponsibility for the coming year to the extent of another $11.7 billion. The figure for the coming year depends also on the government being able to sell off assets to the value of $2.45 billion—something which itself will be dependent on the suitability of market conditions and profit expectations for assets; for example, Qantas. I do not need to remind the Senate what is happening in terms of the slides on the share market at present. Therefore, the ability of the government to achieve its predicted $2.45 billion assets sales target is very conditional.

  I do not think the government has thought through a number of its proposals in its last budget. This morning I gave notice of a motion in which I reminded the Senate of a problem that the government could find in the share ownership plan, which is going to disenfranchise large sections of the work force. Yesterday I also reminded the Senate that under the Qantas so-called employee share plan there could be a fringe benefits tax liability in excess of $20 million, which would have to be taken into account in assessing the final price and which would be a further reduction on the government's expectation of the sale proceeds.

  I think I need to remind the Senate of a few undertakings given by the government. On page 41 of One Nation, the Prime Minister (Mr Keating) said that the Australian Commonwealth budget deficit would be—and for fiscal responsibility would need to be—less than $1 billion in 1994-95 and that for 1995-96 there would be a surplus of $2 billion. By his own definition, therefore, the Prime Minister has just overseen the presentation of a fiscally irresponsible budget.

  The Labor Party's election hysteria before last year's federal election led to the death of fiscal responsibility at the hands of political cynicism. The government revised its plan so that a deficit of about $5.5 billion was forecast for 1996-97. This remains the official target. But on the history of recent years it would be no surprise if the government forgot its responsibilities yet again.

  It is easy for observers to say that Mr Keating's forecast went astray because his growth predictions did not materialise. However, this explanation is really not so elementary. One Nation anticipated 4.75 per cent and 4.5 per cent real growth in 1992-93 and 1993-94. The outcome was far less—2.9 per cent and four per cent, respectively. These variations from the anticipated growth figures cannot explain the vast differences which occurred in the actual budget deficit results.

  The government has also broken its promises on the second round of tax cuts announced in One Nation, with the tax cuts planned for 1 January 1996 now suspended completely despite the undertakings at the election that they were `l-a-w—read my lips'. This should normally make the lower deficit targets easier to achieve but, again, recent accomplishments give us no confidence that this will eventuate.

  It is not surprising that the financial markets are suddenly becoming jittery as they see the full implications of the 1992 targets being so blatantly ignored. The latest prediction is a deficit of $11.7 billion in 1994-95—nearly $8 billion more than the One Nation predictions. The budget predicts a deficit for 1995-96 of $9.8 billion—some $12 billion over the One Nation goal.

  If Mr Keating was so forthright in stating in 1992 that fiscal responsibility required nothing short of a $2 billion surplus for 1995-96, where have all his standards gone? In any other field of economic life in this country, a managing director who failed so badly to achieve his own standards of discipline would have been removed by one of his colleagues. No wonder the Prime Minister prefers to keep political debate at the level of flags and other extraneous issues—issues which my colleagues will continue to address in this House.