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Thursday, 25 August 1994
Page: 417

Senator BROWNHILL (Deputy Leader of the National Party of Australia) (5.36 p.m.) —I welcome the opportunity to speak to Senator Tambling's motion. I think it basically highlights the ineptitude of this government in managing the economy. I wonder whether slowing down housing at a time when the economy is trying to get kick-started is quite the way to be going at this moment.

  The increase in interest rates of 0.75 per cent has paralysed the housing market already and has been condemned by the Real Estate Institute of Australia. That rise has knocked the guts out of the housing market. I think it has most probably also knocked the confidence out of people in relation to what is happening, what this government is doing and where it is going.

  I think the government has failed to recognise the impact this will have on the rural sector, which already has a debt of $17.2 billion or $17.3 billion, a lot of it imposed by this government. This latest 0.75 per cent increase in interest rates will add another $120 million in interest every year to the existing debt. I think most people are saying, `When is this going to stop and how is it going to stop?' If it does not stop, we will get back to the old cycle again. People will lose confidence and the drought stricken farmers especially will have their noses pushed right into the dust.

  Farmers trying to get new carry-on loans to get them through the drought are now wondering what the interest rate is going to be in six months time. They are asking whether we are on the spiral again and whether we will go like we did during the 1980s under this government when interest rates went up to 24 and 25 per cent—even as high as 26 per cent for some farmers. That did not just push their noses into the dirt; it pushed them right under the water, when there was water, and pushed them right into the dust bowl when there was not. I think this will be the final straw for many farmers who are on the edge of viability at the moment. Senator Tambling has put a very good motion before us because it talks about the fiscal irresponsibility and mismanagement of the government.

  In looking at what is happening at the moment, because of this fiscal irresponsibility of the government, as I said, farmers are terrified of taking on any more debt, even when they are offered it under the rural adjustment scheme, because they fear that the 1980s are going to come back and haunt them. I think a lot of the financial problems we have now are due to the fact that the government has not planned properly over the years.

  There is no doubt that the government has brought back inflation. However, at the same time it has also brought back the number of farmers in Australia. The government is not listening to what is happening in the real world. That was one of the points that I tried to make a couple of days ago in the debate with Senator Collins about the irresponsibility of the Prime Minister. I was not condemning Senator Collins; I was condemning the Prime Minister for his lack of understanding of what is happening.

  Now, of course, the government is not even listening to a warning from the Reserve Bank—as the coalition has been saying for some time—about the government's impossible debt reduction strategy. We only have to look at this morning's papers. In the Sydney Morning Herald, Ross Gittins said:

Never before has the board of the Reserve Bank been so outspoken about an aspect of economic policy outside its responsibility. Never before has the Governor of the Reserve, Bernie Fraser, been so openly critical of the Government's performance.

Those are pretty harsh words. Bernie has not been too far offside with the government most of the time, but he is now saying, `You have done it wrong, fellows. You had better smarten yourselves up'. In another article, Anna Bernasek wrote:

The Reserve Bank yesterday gave its strongest warning to the government to cut its Budget deficit faster or face much higher interest rates.

Anyone who is in business is as worried as hell. What is going to happen to interest rates? If people have an overdraft now, are the interest rates going to increase dramatically on it? Are the interest rates going to last very long for someone who wants to take out a new loan? In this morning's Australian, Alan Wood, a very respected economic writer, said under the headline `Three important messages from the RBA':

Reserve Bank annual reports are written in a style that makes them about as exciting as women's cricket . . .

I do not agree with that, actually. I believe that women's cricket is very exciting. I have watched test cricket between Australia and New Zealand. To be quite honest, I think sometimes it is more interesting than the men's cricket. The women get on with the job and they are pretty good. I do not agree with Alan Wood on that, but I agree with the rest of his article. He says:

The three main ones in the latest report are aimed at the Government, the banks, and the unions.

We know that the unions run the Labor Party. The banks are deregulated, and there is nothing wrong with that. I do not agree with Senator Kernot on that point. Alan Wood goes on to say:

For the Government the message is that fiscal policy needs to be tighter, to make room for business investment, to minimise balance of payments risks and to avoid high interest rates.

That is another warning. No-one on the government side quite understands business. A lot of those sitting opposite have been on salaries all their lives—maybe trade union salaries. They get their money every day at the expense of the people in the unions who work their guts out. Union officials end up getting into parliament. They do not have to worry too much about interest rates. They do not make investments and risk capital. They are the ones who are sent here after having had a pretty easy time ripping off the funds from the unions and the poor old workers. As union officials they get a saloon passage into this place.

  I will go back to this article by Ross Gittins. I would like to quote him again because he sums it up very well. He says:

One reason interest rates rose so high in the late `80s was that the inflation rate then was much higher—7 or 8 per cent—than today's 2 per cent.

As I have said, 2 per cent is all right, but its effect is going to be lost if interest rates rise dramatically. We will more than likely have wage demands by the union movement. Ross Gittins goes on:

But another reason was that the Government, in its efforts to slow the economy, relied too heavily on monetary policy and not heavily enough on fiscal policy, the Budget.

That is exactly what Senator Tambling is talking about in his motion. Senator Tambling is always spot on, but even more so today. Ross Gittins goes on:

The Opposition has been predicting for months that the Government would make the same mistake this time round. Now it's clear that Mr Fraser and the Reserve Bank board have the same fear.

The opposition, the Reserve Bank board and Mr Fraser—the trifecta. We are definitely right. The guys on the other side of this chamber are not getting the message. Ross Gittins goes on to say:

Last week, the Government demonstrated a degree of political courage in not resisting the Reserve's decision to raise interest rates by 0.75 per cent.

Stuff the people who are going to have to pay all that extra interest. He continues:

But back in May—well away from an election—it demonstrated an inability to summon the courage either to increase taxes or to cut back its spending. It's remarkable to think that it regards higher interest rates as the easier way out.

It may be the easier way out for the government but, I tell you what, it is not an easier way out for people who are borrowing money.

  The government has other things on its mind, of course. I read a headline in the paper that said, `Evans yields'. I thought, `Hell, it must be a good investment. Maybe the yields are up on Evans'. They are not, of course, because they are down. It says, `Evans yields to Jones in confrontation over Reps seat'. One of the problems at the moment is that the government is preoccupied with the question of whether it can switch Senator Evans down to the House of Representatives so that maybe he can take over the leadership of the Labor Party before the next election if the person who calls everyone else `scumbag' and calls us `unrepresentative swill' loses his nerve—which he is starting to lose—and looks as if he cannot win an election. They want Senator Evans down there so that he can take over the leadership of the Labor Party.

  We notice that Senator Ray and Senator Evans have been sitting in this chamber talking to each other. I suppose they have been trying to work out some sort of deal, or to find out where things went wrong. They definitely went wrong. I do not think Mr Jones, the member for Lalor, is going to yield too easily to let Senator Evans take a shoo-in ride.

  Mr Jones has been suggesting that Senator Evans goes into other seats that have various margins. I suppose some of those margins might be like interest rates; they may pale into insignificance.

  The sale of ANL is a classic example of this government dummying up the books; calling it an asset when it has already been revealed as a major negative where the government would have to pay someone to take it off its hands. Paying somebody to take ANL off the government's hands is another job. Maybe the government has a preoccupation with fiscal policy and monetary policy and is worried about where it is going to get the money to pay Neville Wran, the old mate. The government is giving him $150,000. The government is giving Malcolm Turnbull another heap. After the government has made a mistake with ANL, holy hell, would it not be great if we could all take a share of that sort of money to go and fix up something that the government has mucked up?

  The government has definitely mucked up our economy and it is mucking up the way it is handling the interest rates at the moment. The government is absolutely preoccupied with other things rather than being preoccupied with the fiscal policy to fix this country. This country desperately needs a government that is going to handle the economy properly.

  The government refuses to occupy its mind with the economy. This shows up a little in the refusal of the Prime Minister to attend question time every day. I saw the Prime Minister on television last night and he did not look too happy out in the bush. Perhaps if he stayed here and listened to the questions instead of trying to do a public relations exercise he might be better off. I thank him for some of the money that he is giving to landcare; it is great. Perhaps it is a little bit too late, but maybe it helps. I accept the fact that he has done that, and I thank him for what he is doing for New South Wales.

  I believe he needs to sit down and work out with his economic advisers how he is going to fix up the economy so that he is not going to slam all the people he saw yesterday—the people to whom he threw a few bread crumbs—with higher interest rates. We have high interest rates now, and perhaps we will have higher interest rates in a little time to come. I know that Senator Crane wants to enter this debate, so I am about to finish.

  I introduced the debate on the drought to the chamber and condemned the Prime Minister for his irresponsibility and his lack of interest and care for the Australian farmers who are suffering so much from drought. On Tuesday, Senator Collins told the Senate that $14 million in aid was given to the farmers and that that was great. I think I said at the time, `So what?' I will not repeat what I said because I do not think it was quite parliamentary. I think I might have said it was only a little `tiddle' or tiddly bit. I think I might have used a different initial letter. It is only a little tiddle in the ocean—trying to make it rise. He stands condemned for doing that.

  We will lose something like $600 million in wheat, and our cotton growers will lose something like $480 million in north-west New South Wales. Around Dalby in Queensland farmers have missed four years of cropping, which is about eight crops. The situation requires more than just throwing a few little crumbs at people. It needs a lot more than that. The Prime Minister's fiscal policy has been irresponsible. He had knocked the farming community for six before we even had this drought. He stands condemned for that. Senator Collins, even though he tried to defend the Prime Minister the other day, has failed dismally. The government has failed dismally on the terms of this motion as put forward by Senator Tambling. I definitely join with Senator Tambling in the first part of the motion in condemning the government for its fiscal irresponsibilities.

  I note the government's disregard of the evidence that Australia's home finance market has continued to slow down over recent months. I deplore the government's approval of the decision by the Reserve Bank of Australia to increase the risk of waiting for home loans where equity is less than 20 per cent and its consequent effect on low-income earners. I express concern at the government's lack of understanding and compassion for the housing needs of Australian families. We have to have some compassion not only for those with housing needs, but also for those on the farms who are trying to fight a drought when they have a government that is so irresponsible in the handling of the economy of this country.