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Treasury Secretary urges caution in interpreting quarterly national account figures

JOHN HIGHFIELD: Well, the Government's resolve to reduce the Budget deficit by $8 billon over the next two years is obviously causing great concern, not just within Federal Opposition ranks but also, it seems, amongst some of the Government's own supporters. Amanda Vanstone's Liberal senatorial colleague, Baden Teague, took the microphone today at one of those education rallies to argue that the Government needs to keep its promise to maintain funding to universities. But, as Michael Cavanagh reports, those who used yesterday's national growth figures to argue against the proposed $8 billion Budget cuts were contradicted today during a rare public appearance by the head of Treasury, Ted Evans.

MICHAEL CAVANAGH: The continuing speculation over just where the Government will cut spending to balance the Budget over the next two years has brought howls of indignation from the Opposition, members of the community, and, though not as loud, from some of its own. The cries became even stronger with the March quarter growth rate released yesterday, which showed the economy growing annually at 4.8 per cent, much faster than expected. However, if opponents of the cuts thought this may have influenced Treasury to ease off, Treasury head, Ted Evans, addressing the Life Investment and Superannuation Association of Australia, dispelled their hopes.

Mr Evans says one should not be too impressed with statistics which come out every day.

TED EVANS: One should consider, for example, the figures that were released yesterday on the March quarter national accounts showing strong growth and the clamouring in the wake of that for changes to the Government's announced fiscal policy, changes to interest rates, to monetary policy. One might be wise to step back a little from figures such as those and think a little more deeply before jumping to policy conclusions.

MICHAEL CAVANAGH: And he pointed out, those who are using the growth result as their basis for their argument should temper their enthusiasm.

TED EVANS: Even though individual figures can, at time and individual events, can be quite momentous in changing policies - witness Port Arthur in another field - that's not generally the case and one has to assess figures very, very carefully, not least because, if one looks at, say, yesterday's GDP figures for the March quarter, there's one thing that you can be very sure of and probably only one that you can be sure of, and that is that when we next see that figure produced, as it will be in three months' time when we have the June quarter, we can be quite sure that the March quarter figure will not be the figure that we saw yesterday. It will be revised.

MICHAEL CAVANAGH: But if the Government was pleased to hear its top Treasury bureaucrat urging caution over yesterday's figures, Mr Evans appeared to question a total reliance upon cuts to Government spending to achieve the Budget result.

TED EVANS: Although many find it easy to suggest that an $8 billion figure, an $8 billion change in the Government's account, might best be achieved by expenditure reductions rather than revenue increases, that is also a rather simplistic approach. It is frequently an ideological approach, but even when it's more than that, even when it relies upon some logical or rational thinking, it is nonetheless simplistic.

MICHAEL CAVANAGH: While Mr Evans was delivering his opinion in the Parliament, the Opposition was wielding growth figures as a weapon in this question from Shadow Industry Minister, Simon Crean.

EXTRACT

SIMON CREAN: I refer to your comments, Treasurer, yesterday on the excellent growth and productivity figures for the March quarter. Given that yesterday the Member for Cowan had the decency to apologise for claiming someone else's work as his own, will the Treasurer also do the decent thing and acknowledge that yesterday's figures were all Labor's work and had nothing to do with him?

MICHAEL CAVANAGH: However, Mr Crean had neglected to mention today's April balance of payments figure, the worst trade performance in five months, with the current account deficit widening by $791 million to just under $2 billion, seasonally adjusted, a point seized upon by Treasurer, Peter Costello.

EXTRACT

PETER COSTELLO: May I say that this is the reason why they shouldn't draft his questions on 24-hours notice because if his questions were right, will he stand here and take responsibility for today's balance of payment figures?

MICHAEL CAVANAGH: The Treasurer didn't stop there attacking the Opposition, accusing it of tripling government debt in four years while in power.

PETER COSTELLO: An inter-generational shift against future Australians. That was the policy. A form of financial child abuse, that's what it was. The policy that tripled debt against generations of future Australians.

MICHAEL CAVANAGH: This was too much for Opposition Leader, Kim Beazley.

KIM BEAZLEY: We accept that we have a more than usually puerile Treasurer in this place, but I take offence at the expression that the Government was running a form of child abuse in any area when we were in office, and I ask for that to be withdrawn immediately.

SPEAKER: There is no point of order.

KIM BEAZLEY: It's not a point of order, it's taking offence, and I'm asking for a withdrawal. Is he going to ask you for a withdrawal?

SPEAKER: You find the comment personally unacceptable?

KIM BEAZLEY: I certainly find the comment personally offensive.

SPEAKER: The Treasurer has caused some ....

PETER COSTELLO: The comment, Mr Speaker, was a form of financial child abuse.

SPEAKER: Order, order.

PETER COSTELLO:... running up debt is exactly that.

KIM BEAZLEY: Are you going to withdraw that or not?

PETER COSTELLO: No, of course, I'm not.

SPEAKER: I'm in charge. The Leader of the Opposition has taken deep offence at the remark. I ask the Treasurer to withdraw his comment.

PETER COSTELLO: Well, unusually sensitive, Mr Speaker, but if you ask me to, I will.

JOHN HIGHFIELD: Federal Treasurer, Peter Costello, in Question Time in Parliament today, and P.M's report by Michael Cavanagh.