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The fanciful dream of a desperate man



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Peter Reith

THE FANCIFUL DREAM O F A DESPERATE MAN

The economic statement issued by Prime Minister Paul Keating tonight is an irresponsible spending spree full of transparent election bribes.

Paul Keating stood in front of the Australian people tonight as a tragic figure.

In a desperate bid to try and match the fundamental economic benefits contained in the Coalition's “Fightback· program, Mr Keating has just gone over the top.

He proposes a massive, unfunded spending spree.

According to the Government's own numbers, public debt will rise by $20 billion over the next four years.

Considering that Mr Keating is claiming his statement will only create 500,000 jobs (over and above the 300,000 he says his recession has destroyed); that $20 billion in extra public debt represents $40,000 per job.

Mr Keating is relying on highly optimistic forecasts. Principally he is forecasting more rapid economic growth next year than the average growth for the major OECD countries and productivity growth is expected to show significant increases.

Rather than fundamental economic reform, Keating's statement is full of election bribes.

Most disturbing, however, is the grossly inequitable Keating 1994 and 1996 tax cuts. Nearly 4 million poor and low income earners and their families - or almost 50% of taxpayers - are unquestionably worse off.

Low income earners will be ripped off by bracket creep all the way between now and 1994 and yet, when the tax cuts are finally delivered, someone on $20,000 gets a zero tax cut while someone on $60,000 per year will get a significant tax cut.

The fact is that all Mr Keating is trying to do is desperately match the good news of the "Fightback" package without doing the hard work.

What his rosy forecasts do not tell Australians is that the large increase in public debt is almost certainly going to raise interest rates.

It does not take much sense to realise that any rise in interest rates due to this spending spree will simply offset any gains from spending on infrastructure in Mr Keating's statement.

Mr Keating is correct: this statement is a turning point in Australia's history. However, not to his benefit. This statement will spell the death-knell of a decade of incompetent Labor federal governments.

26 February 1992 Canberra

COMMONWEALTH

P A R L IA M E N T A R Y LIBRARY M IC A H

Contact: David Turnbull (06) 2774277 D21/92