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Keating government U-turn on fiscal policy



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Senator Jim Short Deputy Leader of the Opposition in the Senate Shadow Minister for Finance & Assisting the Leader on Commonwealth/State Relations

KEATING GOVERNMENT U-TURN ON FISCAL POLICY

Senate Estimates Committee hearings have revealed th a t the Keating Government has made a complete U-tum on its fiscal and tax policies, the Shadow Minister for Finance, Senator Jim Short, said today.

Responses from Treasury officers at the Estimates hearings last week highlighted contradictions in the Government's policies and pointed to a vote-buying spree aimed at the coming election.

"There are clear contradictions between the fiscal measures of Budgets during the eighties and the blatant vote buying of this year's Budget," Senator Short said.

"In attempting to justify these contradictions, Treasury officials at the Estimates hearings were only able to cite a need for 'short term stimulus' - but 'short term' means at least the next four years.

"Surely even the Government doesn't expect the recession to last that long!"

Senator Short said it was not surprising th at Treasury officials had attempted to defend the Government's turnaround.

But the real story had been exposed in comments by the Treasury Deputy Secretary, Mr John Fraser, that the "one continuing theme is that in the longer term, development and running of fiscal policy must keep a very keen eye on our national savings performance".

"This is really another way of saying that we can't let our fiscal house run out of control for six years and expect things to come right in the long term," Senator Short said.

"The net public sector borrowing requirement has increased z continuously since 1988-89, with the general government net borrowing

COMMONWEALTH

PARLIAMENTARY LIBRARY M1CAH

requirement deteriorating in the past two years by 6.2% of GDP. General government outlays reached 37.5% of GDP, well above the previous peak in 1984-85. 1992-93 will see still further profligacy."

"In fact, on the Government's own figures, the accumulated deficit in the five years to 1995-96 will be around $50 billion. The underlying deficit will be even higher."

Similar contradictions can be seen in the Keating Government's policy reversal on tax.

"The head of tax policy in Treasury, Mr Greg Smith, conceded in an interview ear her this year that the Prime Minister's One Nation statem ent saw tax policy move in "the reverse direction of the previous eight years1 1 .

"In cross-examining Mr Smith about th at interview, it became clear that instead of focussing on a fairer and more efficient tax system, the Government is now preoccupied with trying to pick vote winners.

"Mr Keating and his Ministers appear to be suffering from a collective lapse of memory about the justice of earlier attempted reforms, such as a broadly based consumption tax." ·

Senator Short said the Government, and in particular the Prime Minister, were guilty of ignoring the advice of the premier economic advisory body at their disposal.

"One can only sympathise with the Treasury officials," he said. "Despite their efforts in the Estimates Committee hearings, these officers showed only too plainly that they can see through the sham of the

Government's recent policy reversals.

"It is no credit to Mr Keating and Mr Dawkins th at they have tried to pin the blame for the recession, and these consequent policy turnarounds, on the Treasury.

"The Opposition isn't fooled, Treasury isn't fooled and, I believe, ordinary Australians aren't fooled by these latest machinations of a discredited and disintegrating Government."

Canberra 26 October 1992

For .further information: Rod Woolley (06)277 3119

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