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Tuesday, 23 August 1994
Page: 17

Senator KEMP (3.17 p.m.) —I rise to also comment on the issue of interest rates which was raised in a question to Senator Evans. As a preliminary comment, I point out to Senator Kernot that she referred to the need to have specific policies, something with which we all agree. From a North Queensland phone call I recently received, I understand that Senator Kernot was up in North Queensland complaining about the price of fuel. Someone said to me, `Senator Kernot has been complaining about the high price of fuel in North Queensland.' I replied, `Senator Kernot voted to increase the fuel excise by 6c.' So Senator Kernot should be true to her policies. She voted to increase the price of petrol, so she should not go up to North Queensland and complain about the high price of petrol—which, she should be quite frank, she did.

  On the subject of interest rates, Senator Kernot did not tackle the fundamental issue. We listened carefully to what she said and it did not include the one thing that people want to hear: manage the economy better. The government at present has a very expansionary fiscal policy, with massive deficits, and at the same time it is attempting to haul the economy back, as it did in the `recession we had to have', by lifting interest rates. So the government is driving the economy with very high deficit expenditure, which is why private consumption is going up, as was referred to by Senator Kernot, and at the same time, to counter some of the inflationary effects emerging from this, it now has to raise interest rates.

  Senator Kernot was talking about adjustments at the edges. Senator Kernot did not tackle the question: why does Australia with its current low level of inflation—but not for long—have some of the highest interest rates in the Western world? Why did Senator Kernot not tackle that fundamental issue?

  Senator Hill, to his credit, pressed Senator Evans on this issue and asked him why it is that interest rates in Australia, prime rates in Australia, are amongst the highest in the Western world. Senator Evans simply could not give an answer. He mumbled something about its being due to history and structural arrangements in the Australian economy.

  This issue is important because what we are seeing now—and I think many people are concerned about it—is a re-run of the `recession that we had to have'. Remember that interest rates are now widely attributed by everyone in the community, including members of the Labor Party, to the recession because interest rates were kept too high for too long. The government, on the one hand, wants to big-note itself by spending up big and, on the other hand, is attempting to counter this by raising interest rates.

  I say to Senator Kernot that she should be true to her policies. If she comes into this chamber and votes to increase spending and taxes, she should not run off to North Queensland and start complaining about high taxes. In relation to the levels of interest rates, why is it that Australia has amongst the highest interest rates in the Western world? The answer is that we have a very poorly managed economy.

  Question resolved in the affirmative.