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Monday, 29 August 1994
Page: 463

Senator HILL —My question is directed to the Leader of the Government in the Senate. I refer to the latest balance of payments figures, which deteriorated by a disastrous 21 per cent during July and demonstrate a worsening trend. I ask: will not this deterioration in the overseas accounts accelerate as forecast private investment begins to come on-stream? When will the government concede that there is an urgent need to cut back the budget deficit if rising interest rates are not going to strangle the recovery and the promise of new jobs and reduced unemployment?

Senator GARETH EVANS —Market expectations for this month's balance of payments were in the range of $1.4 billion to $1.8 billion. It is the case that the figure that came in, at $1.8 billion, is at the higher end of that range of expectations. But the current account deficit in percentage terms did remain steady at about 3 3/4per cent of GDP in 1993-94 and it is forecast to rise only fractionally in 1994-95, even though, of course, the economy is experiencing solid recovery and, as Senator Hill says, that can be expected to suck in a considerable level of capital imports as a result.

  Of course it is the case, here as on every other occasion, that not too much weight should be placed on a particular month's figures—in this case, the figures for July—because of the inherent volatility in these month to month figures. The July deficit was, as I said, in the range of seasonally adjusted monthly outcomes for 1992-93 and 1993-94. It was also in the range of market expectations, and it was simply shrugged off by financial markets. If the opposition had any sense at all, and was not distracted by the dilemmas and idiocies that it has got itself involved in, it would be shrugging it off, too.

  Opposition senators interjecting

Senator GARETH EVANS —I am not distracted. I am firing on all cylinders, which is more than I can say for any of those opposite. Not one of them is firing at all—what a collection of damp squibs!

  The current account deficit might, of course, increase in recovery due to investment related imports and increased consumption. The increase in production capacity from capital imports should, of course, enhance the export earning capacity of the nation; that is why we do it. The budget forecasts have already made allowance for the impact of stronger economic growth on imports. As a result, there is no basis for any change in fiscal policy. Our international competitiveness has improved by around 30 per cent in the last 10 years. It has been further helped by low inflation, strong productivity growth and low wage rises.

Senator Ian Macdonald —You have been saying that for 12 years.

Senator GARETH EVANS —Our manufactured exports continue to respond to the government's program of structural reform. I point out to Senator Macdonald that exports of ETMs in 1993-94 were 16 per cent higher than in 1992-93. That is the condition that the economy is in. The Australian government has absolutely no adjustments to make to budgetary outcomes or anything else as a result of these particular figures. The opposition knows it, and it might as well turn back to muckraking, sleaze-bagging or something else that it is a bit better at, because it is no good at attacking the government's credibility on this.

Senator HILL —Mr President, I ask a supplementary question. Rather than what Senator Evans has said, what we are concerned about is a repeat of the same pattern that led to one million Australians being out of work. Is it not the situation that, despite the government's hype, we are back into that same pattern again, with rising balance of payments deficits which will no doubt justify the government, in its mind, forcing up interest rates as it did in the late 1980s and early 1990s to so-called dampen demand? As a result of that, we had to have the worst recession in 60 years, with nearly one million people unemployed in this country. Are we not back into exactly the same set pattern that we had before? As a result of deliberate government policy, we already have interest rates on the rise, rather than the government attempting to tackle the deficit, which might give a benefit in terms of increased jobs. Will the minister explain to the Senate why this is not simply a repeat of what happened in the late 1980s and early 1990s which led to one million Australians being out of work?

Senator GARETH EVANS —Mr President, I will tell you who is back into the pattern of before; I will tell you who is right back into the pattern of yesteryear. It is the opposition—the old time politics of division: gimme that old time division that Peacock offered, that Hewson offered, that Howard offered; give it to us again, the old time division. `If it is good enough for Hewson, it is good enough for me.'

Senator Campbell —I take a point of order, Mr President. I ask that you direct the member for Jagajaga or for Lalor, or whatever he wants to be, to answer the question.

The PRESIDENT —Order! I think it is wise not to debate the issue, Senator.

Senator GARETH EVANS —Mr President, what we have is a clearly mapped, a clearly charted and a clearly being implemented policy course for this country. It is up to those on the other side who would challenge that policy course, who would draw attention to the alleged deficiencies, to say what they would do that would be any better. Where is their messiah in short pants? What is he saying about how the economy should go? Where is their particular tired and emotional policy engine? What is he generating that is going to help the economy or help the country get out of this particular situation? We know what we are doing, and if those opposite had any sense they would acknowledge it and shut up.