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Wednesday, 20 August 1980
Page: 550

Mr HOWARD (Bennelong) (Treasurer) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to provide the legislative authority needed to meet the prospective deficit in the Consolidated Revenue Fund in 1980-81. At the same time it will, together with authorities expected to be available under other legislation, provide the borrowing authority needed to finance the estimated overall Budget deficit for the financial year.

Honourable members will be aware that, for many years, there has been legislation for these purposes in the legislative programs of successive governments. In my Budget Speech I announced that the prospective overall Budget deficit for 1980-81 is estimated to be $ 1,566m. Except insofar as funds are available from accumulated cash balances or other miscellaneous financing transactions, this deficit must be financed by net borrowings. Such net borrowings must, of course, be within proper legislative authority derived from the Parliament. The overall Budget deficit takes into account all relevant transactions of the three separate funds used to record the Commonwealth's receipts and expenditures. These funds are the Consolidated Revenue Fund, the Loan Fund and the Trust Fund. The amounts which may be paid from each fund are limited to the amounts legally available to it.

Underlying the overall deficit estimated for 1980-81 is an estimated deficit in the Consolidated Revenue Fund of $662m. Details of the current estimate of the Consolidated Revenue Fund transactions are set out, for the information of honourable members, in table 3 of Budget Paper No. 4 - Estimates of Receipts and Summary of Estimated Expenditure for the Year Ending 30 June 1981. As payments from the Consolidated Revenue Fund cannot exceed moneys available in it, it is necessary either to reduce payments from the Consolidated Revenue Fund by charging to Loan Fund some expenditures normally met from the Consolidated Revenue Fund or, alternatively, to supplement the receipts of the Consolidated Revenue Fund from some other source. Appropriate legislative authority is needed for such transfers. The simplest and traditional means of providing appropriate legislative authority is a loan Bill of the type I am now presenting.

This Bill will authorise borrowings for defence purposes in order that defence expenditure, which would normally be met from the Consolidated Revenue Fund, may instead be met from the Loan Fund. The Bill authorises borrowing for defence purposes. I should make it clear, however, that it does not authorise any defence expenditures additional to those which have already been authorised by Parliament in Supply Act (No. I) 1 980-8 1 or which will subsequently be authorised in Appropriation Acts for this financial year. It will simply allow reallocations of defence expenditures between the Consolidated Revenue Fund and the Loan Fund to be made during the remainder of the financial year, following the enactment of this legislation.

In this regard I draw the attention of honourable members to clause 8 of the recently introduced Appropriation Bill (No. 1) 1980-81, which makes that Bill subject to the provisions of the proposed Loan Act. I should also mention that, as borrowings under this legislation will be for the purpose of financing defence expenditure, those borrowings will not require approval from the Australian Loan Council. The Bill includes a specific limit to the amount of such borrowings that may be undertaken. This limit is directly related to the level of defence expenditure which is expected to be made from the date of enactment of the Bill to 30 June 1981. Honourable members will be aware that, at this early stage, the estimate of the Consolidated Revenue Fund deficit is inevitably a qualified one. The actual figure for the year will be affected by presently unforseen developments during the year which could cause departures from current estimates of receipts and payments of the Fund. In setting a limit on borrowings for inclusion in the Bill these inherent uncertainties need to be recognised. The limit that has been included is $900m. This provides a reasonable margin over the estimated Consolidated Revenue Fund deficit of $662m. Borrowings under this proposed legislation will be undertaken within the framework of the monetary policy objective to which I referred in my Budget Speech. I commend the Bill to the House.

Debate (on motion by Mr West) adjourned.

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