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Monday, 29 August 1994
Page: 479

Senator SHORT (3.14 p.m.) —I want to add to and support the words of the Leader of the Opposition in the Senate, Senator Hill, in taking note of an answer given by Senator Gareth Evans during question time today. Indeed, the minister's subsequent answer has simply compounded the felony of his question time answer and has revealed his total ignorance when it comes to economic matters and looking at what is happening to the economy of this country.

  We all agree with Senator Gareth Evans that we cannot judge too much on one month's figures. But what Senator Hill was saying was not based on one month's figures: it was based on the trend of figures of recent months released today along with the July figures. The July balance of payments current account was a deficit of $1.8 million. That is a huge deficit, but it is not uncommon in comparison with deficits in recent months and, indeed, in recent years.

  Today's seasonally adjusted figures show that in the last four months the current account deficit has been, respectively, $1.7 billion, $1.8 billion, $1.5 billion and, today, $1.8 billion—that is, $6.8 billion in the last four months. That is an annual rate of $20.4 billion. That compares with a budget estimate of $18 billion. So we are running well ahead of the budget estimate at this stage which, in turn, was well above the actual outturn of $16 billion for 1993-94. I note with interest and concern that the revisions in the balance of payment figures published today show that in fact the 1993-94 outturn was almost half a billion dollars—$492 million—higher than the previously published figure.

  If we look at the graphs published today, we see that we have a deteriorating trend in the current account deficit, as Senator Hill said. That trend has been deteriorating since approximately January of this year. We also have a deteriorating trend in the balance on goods and services. That trend has also been deteriorating for several quarters. We have a deteriorating trend in merchandise trade. That has also been happening for several quarters. If we look at the components of that, we see that the trend in exports has been flat for the last year. In July, exports actually fell by three per cent, and that included a five per cent fall in non-rural exports. So all this talk about a huge performance in exports, particularly in ETMs, is simply not supported by the figures.

  The import trend, in contrast to the flat export trend, is sharply upwards. That trend has been going sharply upwards since the September quarter of 1991. In other words, that has been increasing for almost three years. In July of this year, imports, seasonally adjusted, went up another three per cent. I point out to Senator Evans that, in non-adjusted terms, imports this month rose by no less than 12 per cent. The increase in consumption goods was a staggering 18 per cent, compared with only seven per cent for capital goods.

  So we have a situation of a continuing and progressively very serious deterioration in the balance of payments from an already serious position. We have a situation where interest rates are being put up as a result of a very lax fiscal budgetary policy by this government. Interest rates will inevitably go up, and continue to go up, whilst the budget deficit remains at an excessive level. There is no suggestion that the government will change course on that.

  The interest rate increase will strangle investment. The point that Senator Hill made is absolutely right: we are running a very grave risk of seeing an economic recovery, which is very fragile at this stage, being aborted before it has really got off the ground on any sustainable basis because of the sheer incompetence of the economic policy making of this government.