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Wednesday, 1 April 1987
Page: 1885

Dr HARRY EDWARDS(3.54) —Prior to the suspension of the sitting for luncheon I had drawn attention to the critical, indeed the dangerous, situation of the Australian economy and the consistent failure of this Government, the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) to tell it as it is. The situation confronts the Government and this country with an enormous adjustment task. It requires, inter alia, a commitment to fiscal discipline, to budgetary restraint-in plain language, to taking the axe to government spending and borrowing to a degree beyond anything which I am convinced has even crossed the minds of this Government, this Prime Minister and this Treasurer. There is to be a May statement. But what are the dimensions of the task the Government seeks to address? We are not told.

As I said earlier, the Treasurer never misses an opportunity to accuse the Opposition of having `no fiscal policy' and further of a vast, so-called credibility gap. I say that the boot is on the other foot. It is the Treasurer who has the credibility gap. In all his glib talk he does not put forward any quantitative forward view of the fiscal requirements to achieve the massive readjustment of the Australian economy that has to be effected. In point of fact, what is involved is a redeployment of resources towards investment and restoring the external balance of the order of five to six-plus percentage points of gross domestic product-$13 billion to $18 billion in current terms.

I had reached the point just before lunch of suggesting as a minimum requirement, target, of fiscal policy an axing of government spending-not in one fell swoop, but to be given effect over a period of years-of the order, in current terms, of at least $10 billion. I put forward that figure as a back bench guesstimate. It has no status as coalition policy, to which I am not privy-I stress that. The determination and commitment of this coalition, when we achieve government, to take the axe to wasteful and excessive government expenditure is total, single-minded and irrevocable. I remind the House that the Australian people, as surveys have shown, recognise this and place the coalition way out in front in that regard as compared with the Hawke Labor Government.

I say again that it is this Government and this Treasurer, the honourable member for Blaxland, who have the credibility problem-not the Opposition, or the Leader of the Opposition, the honourable member for Bennelong (Mr Howard). If one were to enter a figure for the axing of government spending, such as the minimum $10 billion I have referred to, into the false and misleading tabulation of the Treasurer, which he constantly flourishes in this place and which is the basis for his oft-repeated barb of a `$16 billion credibility gap' that charge would fall to the ground. I have in front of me a rough tabulation I have scribbled out. It shows on the one side, the `credit' side, an `axe to government spending' of at least $10 billion. Also accepting the Treasurer's figure in his paper for broadening the indirect tax base, which is in accord with our standing 1984 policy, of $2 billion, the total comes to $12 billion.

On the other side, the `debit' side, I have the cost of tax changes which the Opposition proposes and which have been speculated about to the order of $5.5 billion to $6 billion. I include a company tax change, which the Treasurer has insisted on including but I have reduced the figure to a more realistic $1.5 billion. I have then added the cost of abolishing the fringe benefits tax, the capital gains tax, the lump sum superannuation tax and assets test, which comes to $0.8 billion. Miscellaneous items, as included in the Treasurer's paper, also come to $0.8 billion. Finally there is the existing deficit which is $3.5 billion. The total is $12.1 billion to $12.6 billion-which balances the other side. I am passing over, leaving out, a claim which the Treasurer includes of a cost to revenue of a wages freeze because that would be offset by the saving in respect of Public Service salary increases.

So there is no credibility gap but a balance. It is the Government that needs to come clean and dispel its credibility gap. Let the Government tell us what the dimensions of the enormous readjustment problem confronting this country are. What actual fiscal policy has the Government in mind? We are not told.

The Hawke Government inherited some advantages as well as, perhaps, some problems from the previous Government. Notable among those advantages was the wages pause. There was also, from nature, the breaking of the drought. The Government has dissipated those advantages and, by its ill-judged policies, it has compounded the readjustment task of this nation. Now it has to confront that task. As I said at the outset, there are no easy, quick-fix overnight solutions. My concern is whether the Hawke Government really appreciates the dimensions, the enormity, of what has to be done. I have a further concern, and that is whether its principal constituencies-the Australian Council of Trade Unions and the high spending lobbies-will, in practice, permit it to do what is required. Perhaps there was something to be said for an early election. Certainly, the sooner the Hawke Government is defeated and a Howard government takes over the reins, the better for the long term future of this country.