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Eight long years to stabalise foreign debt: Keating a failure

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Mr Keating has had 8 years to stabilise the growth in foreign debt. Instead it has risen by around $110 billion.

When Sir Robert Menzies became Prime Minister in 1949 gross foreign debt was 29.9 per cent of GDP. After 8 golden years

foreign debt had fallen to 11.8 per cent of GDP. Another

8 golden years later foreign debt had fallen to a bit over 9 per cent of G DP.

In Parliament yesterday Treasurer Keating tried to dismiss accusations about his inability to stabilise growth in foreign debt by focussing attention on historical changes in debt. He claimed that when he came to office net foreign debt was at

13.5 per cent of GDP and that the rise since then to around

35 per cent of GDP has been only a marginal increase.

Obviously that is laughable.

There are also inconsistencies with Treasurer Keating's argument that the debt growth during his period of Treasurership has been due to the previous government's so-called mis -management and yet the growth of debt during the period of the Fraser government cannot be blamed on the well known economic incompetence of the Whitlam Government.

Mr Keating now appears to be claiming that there was an obvious foreign debt problem when he came to office in 1983. The

question to be asked is: if foreign debt was apparently a

problem in 1983 and Mr Keating has had 8 long years to address that problem, why hasn't he succeeded in reducing the level of debt, or at least stabilising it?

History shows that previous governments have had success in reducing debt.

For example, in direct contrast to the accusations that the current foreign debt problems of Australia are "due to 30 years of Coalition indolence", the years of Liberal and National Party Government since 1949 saw a reduction in foreign debt.

Another important question is : for what purpose were foreign borrowings used?


The growth in Australian living standards during the 1950's and 6 0 's clearly indicates that money borrowed was put to productive u s e .

The growth in debt during the Fraser years is popularly

attributed to the "resources boom". Even Mr Keating says so. The strong economic growth that occurred during the earlier years of the Hawke Government was made possible, at least in part, by the foreign investment growth during the Fraser period.

The asset price boom of the mid to late 1980's, in contrast, is a clear signal that much of the growth in foreign debt during Mr Keating's term in office was wasted in property and paper shuffling speculations.

It is essential that the Government map out a sustainable

strategy for stabilising the growth in foreign debt. Throwing the economy into severe recession is no solution.


8 MARCH 1991 CONTACT: 06 277 4045