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Wednesday, 16 October 2002
Page: 5276

Senator CONROY (2:00 PM) —My question is to Senator Minchin, the Minister for Finance and Administration and the Minister representing the Treasurer. Is the minister aware that, according to an answer by Treasury to a question on notice at Senate estimates hearings, the government paid out $1 billion to the banks in 2001-02 to settle the Treasurer's foreign currency gambling losses? Can the minister confirm that this is a realised loss of $1 billion and that the money paid out can never be recouped?

Senator MINCHIN (Minister for Finance and Administration) —I note that the opposition has quickly reverted to type. The issue that Senator Conroy refers to is, of course, a feed off Laurie Oakes's column in the latest Bulletin and is a miserable and pathetic attempt by the Labor Party to revive this long dead issue in its desperate attempt to show that it has any credibility at all on the question of economic management. It is a very futile attempt. It is well known that the Labor Party made an enormous mess of the economy and of government finances during its period in office, which we have spent 6½ years trying to rectify. I thought Senator Ian Campbell dealt very capably with Senator Conroy's pathetic attempt to raise this issue over lunch. The fact is that the policy of which we speak was introduced by the former Labor government in order to manage the escalating debt that the former Labor government incurred, which rose from something like $16 billion when they were early in office to $96 billion when they left office.

As you know, we took advice on the continuation of that policy and the Treasurer appropriately terminated that policy in the year 2000. It was suspended in December 2000 and, from September 2001, the stock has been run down in accordance with the pre-agreed timetable between the AOFM, the Treasury and the RBA. But to assess whether any particular transaction over its life, which is commonly five to 10 years with these instruments, results in a gain or a loss requires an assessment of both currency movements and interest rate differentials. I draw to the attention of the Senate that the valuation of the AOFM's US exposure does move from day to day. In the last financial year the valuation of the stock showed a gain of $1.2 billion. Of course, the volatility of which I speak has been significantly reduced by our policy of repaying Labor's debt—a policy that those opposite are trying to sabotage by their continued opposition to any suggestion that we might realise our shares in Telstra and therefore eliminate the debt that Labor left us. I note by way of contrast that, in relation to the gain we have had over the last financial year in relation to this matter, those very Telstra shares that those opposite insist the government continue to retain also move from day to day and that in the last year that share portfolio showed a loss in value of over $4 billion, and a loss from the peak to the trough of over $30 billion.

Senator CONROY —Mr President, I ask a supplementary question. Minister, thank you for acknowledging that the Commonwealth has lost $4.4 billion now by your own calculation there. Isn't it true that the $1 billion spent last financial year paying the Treasurer's gambling bills was more than the cost of the war on terrorism and more than any savings that might have come from cuts in pharmaceutical benefits and disability pensions?

Senator MINCHIN (Minister for Finance and Administration) —Senator Conroy clearly was not listening to my answer at all—he pre wrote his supplementary. I said that in the last financial year the stock—that is, of the swaps—held by AOFM showed a gain in value of $1.2 billion.

Senator Conroy —Unrealised; this is about realised.

The PRESIDENT —Order! Senator Conroy!

Senator MINCHIN —These people have no right whatsoever to lecture us about fiscal rectitude after what they did to this country over their 13 years in government. It was an absolute disgrace to leave this country with $96 billion in debt, a deficit of $10 billion every year. Now they come in here and lecture us about fiscal rectitude. How dare they!