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Monday, 2 December 2002
Page: 6827


Senator SANTORO (2:11 PM) —My question is directed to Senator the Hon. Nick Minchin, the Minister for Finance and Administration. Will the minister provide the Senate with an update on the performance of the Australian economy outlined in the Mid-Year Economic and Fiscal Outlook released last week? Will the minister outline the benefits of the government's strong economic management? Is the minister aware of any alternative policies?


Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Santoro for his excellent question and acknowledge his very deep interest in matters economic, unlike those opposite. As Senator Santoro said, the mid-year update of the budget which the Treasurer and I released last week does show that the Australian economy remains in a very strong position. We have discounted growth by 0.75 per cent because of one of the worst droughts this nation has ever experienced, and we do have a relatively uncertain international economic environment. But the Treasury is still forecasting growth of three per cent in this financial year and four per cent in the following financial year, so we do continue to be one of the fastest-growing economies in the developed world.

The underlying cash surplus at the mid-year point is forecast to remain at $2.1 billion for this financial year and to increase in the following year. Of course this is at a time when many of our competitor nations and comparative nations have very significant deficits. The unemployment rate is forecast to remain steady at six per cent, and inflation will remain in the band of two to three per cent. We have also announced additional counter-terrorism measures in the wake of the Bali tragedy and we have made provision for extra spending in relation to exceptional circumstances in the drought, in order to ensure that Australian farmers can cope with this very severe situation. I think the fact that we have been able to cope with the drought, September 11 and the Bali situation does demonstrate just how strong the current budget situation is and how good our economic management has been.

I was asked particularly about MYEFO and I take this opportunity to make some comments about accusations by those opposite that budget transparency has somehow been diminished, which is of course a very strange claim coming from a party that, when going to its last election in government, hid from the Australian people a $10,000 million deficit—one of the worst examples of hiding the true situation we have ever seen. We have revolutionised the transparency of the budget since Labor was in office. For example, the MYEFO document that we released last week was 168 pages of detailed information. When Labor was in office, the midyear update rarely exceeded four pages.

The public and the opposition have much more detailed information available to them now about the Commonwealth government's financial position than has ever been the case. We do now report the budget not only in cash terms but also in accrual terms. I think the problem is that the Labor Party has never understood accrual accounting and simply gets confused by all of the information we now make available to it. We release a detailed MYEFO, a final budget outcome document, monthly financial statements and a set of fully audited consolidated financial statements. When we had just cash budgeting under Labor, all we had given to the parliament from the government were the cash flows of the budget. They did not provide any information on the overall financial position of the government.

Labor has also raised the issue of special accounts. Of course, they are not new. We have had special accounts in one form or another since 1908, and their purpose has not changed. All of these accounts were endorsed by the parliament when they were established via legislation or determination, and Labor has not voted against any single special account created under our government. They are all audited by the ANAO. There were in fact more of these special accounts when Labor was last in office and there was more money in those special accounts when Labor was last in office. Under our government, the budget is as strong and as transparent as any budget in the Western world.