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Wednesday, 9 February 2005
Page: 77

Senator LUNDY (2:47 PM) —My question is to Senator Hill, the Minister representing the Minister for Trade. Does the minister recall his Prime Minister’s promise:

I can promise you that we will follow policies which will ... bring down the foreign debt.

                    …         …         …

Our first priority as Peter Costello and I have made repeatedly clear ... will be to tackle the current account deficit.

Can the minister confirm that under the Howard government Australia’s foreign debt has more than doubled to hit a record high $406 billion and that net exports have made no positive contribution to GDP for the past 3½ years? Don’t these figures indicate the abject failure of the Howard government’s trade policy?

Senator HILL (Minister for Defence) —We have in this country one of the most successful economies in the world, and we have achieved that through good economic management—in the first instance by cutting back on expenditure, which the Labor Party, when it was in government, was unable to do. Remember the situation that we inherited from Labor: $10.3 billion of debt in that one year alone that Labor ministers refused to acknowledge. So we cut back on expenditure. We took hard decisions. On every occasion those hard decisions were opposed by the Labor Party. We started to reform the industrial relations system to build more efficiency into our labour market. That was opposed by the Labor Party. Through lowering expenditure we were able to bring interest rates back from the Labor Party’s record high levels to record low levels. This encouraged investment by Australian business, and out of this we have built a very strong economy. I could add tax reform as well. We took the hard decisions on tax reform that benefited businesses to encourage them to employ and grow, and that has also contributed to the strong Australian economy.

However, it is true that an aspect of our prosperity is that we are sucking in imports at a high rate. It is simply related to the success of our economy in that regard, and it is important that we grow the export side of the equation. That is important. How do we do that? One of the ways in which we do it is to continue down the reform path. That will require an even more efficient labour market and new industrial relations laws. What will the Labor Party do when we put those bills requiring a more efficient labour outcome before this Senate? It will vote against them. When the Labor Party decides to support measures that will improve our export outcomes, then it might have a reason to enter this debate, but until it is prepared to do that, it has no legitimacy in this debate.

As was said by Senator Minchin, the Labor Party had a high current account deficit when the country could not afford it. The difference is that at the moment the economy is very strong.

Opposition senators interjecting—

Senator HILL —It is. That is a matter of fact, because we have not driven down productivity in the way the Labor Party did. The Labor Party gave us both: a high current account deficit and a poorly performing economy. That is why we were in trouble. But the answer, as Senator Minchin said, is to maintain the strength of the economy. We will not do what the Labor Party did. We remember what Mr Keating did. He put interest rates up and up until he had put one million Australians out of work. We are not going to go down that path. We will continue to grow efficiency through sound economic and legislative reform, and we will give the Labor Party another chance to vote for some of those reforms, but I bet you they will not.

Senator LUNDY —Mr President, I ask a supplementary question. In asking it I acknowledge Senator Hill’s rather flamboyant rewriting of Australia’s economic history. Does the minister recall the current Treasurer’s infamous statement in 1995: ‘My analysis is that this is a government that has completely failed Australia on the current account deficit and produced the highest current account deficit ever, which is a total failure of economic policy. That is my analysis’? Can the minister confirm that the current account deficit in 1995 was $26 billion, while the current account deficit in the last 12 months was $50 billion? Minister, on the Treasurer’s analysis, isn’t this a major economic failure of the Howard government’s trade policy?

Senator HILL (Minister for Defence) —What I will remind the honourable senator of—if you listened to her question you would not believe this is true—is that Australian exports recovered in 2004, growing 8.3 per cent in value terms. Exports rose $11.7 billion to $152.5 billion in 2004, the second highest recorded level of exports. Under our policies exports have continued to grow strongly, but imports are also growing strongly because of the strength of the domestic economy. Therefore, in terms of our export outcome, we need to do even better. We need further structural reforms to achieve that goal, and that will require legislation to be passed by this chamber. Instead of complaining, the Labor Party will have a chance to vote on these reforms, particularly industrial relations reforms, and we will see what they will do on those occasions. (Time expired)