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Wednesday, 9 February 2005
Page: 87


Senator STEPHENS (3:23 PM) —I too rise to take note of answers to questions today, particularly a question from Senator Lees to Senator Ian Campbell about the National Competition Council’s recommendation that New South Wales competition payments in relation to its water commitments be cut by $26 million. It is of great concern to me, being a New South Wales senator, that there continues to be so much argy-bargy about the National Water Initiative and the commitments that the Commonwealth made to the states prior to the election being announced and then the sleight of hand that took place during the election campaign, which caused the New South Wales Premier and territory leaders to withdraw from the national water agreement.

That concern was expressed very extensively during the debate on the National Water Commission Bill, which took place in December last year. At that time the minister told this place that he was very confident that the premiers would re-sign, rejoin, the National Water Initiative, that that would happen very quickly and that efforts were in place to ensure that the concerns of the states were being accommodated. That obviously is not the case. We will all now see the National Water Initiative, once more, becoming a political football instead of the national policy priority that it really should be.

The second question that I wanted to take note of was the question to Senator Hill about our current economic situation and the current account deficit, which could be as large as seven per cent of GDP this year, after it rose to $7.4 billion for the three months to December, which is 12 per cent bigger than any previous record. The fact is that economists all over Australia have been warning that this is the case and that we have to do something about our external accounts. We know that Australia’s accumulating foreign debt is at an absolutely unsustainable rate. We are missing out on what has been an extraordinary period of economic growth but which cannot be sustained in the future unless we give some financial security to Australians.

At the same time, we have a Senate Economic References Committee inquiry into the possible links between household debt, demand for imported goods and Australia’s current account deficit. Several significant submissions to that inquiry have raised the concern that is now, very clearly, being raised by the Reserve Bank of Australia and the OECD—that is, as a nation we are no longer paying our way and we cannot continue to keep spending more than we are earning. Foreign debt has doubled under the Howard government, and right now we are one of the poorest performers in the world, with one of the world’s highest foreign debt levels. We are now paying more than $20,000 for every man, woman and child living in Australia. The concern that many economists and the OECD have raised is that this is leading to real concerns about our skills shortages and how we are going to manage that. We have economists saying that this situation is now going to create difficulties for Australia attracting foreign investors. We have many concerns about our levels of infrastructure and skills constraints and the fact that the debt that we have in Australia is personal debt as opposed to government debt, which we know is unsustainable in the longer term.