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Tuesday, 26 February 1985
Page: 199

Mr CARLTON(3.31) —The matter of public importance submitted by the Deputy Leader of the Opposition (Mr Howard) is in the following terms:

The growing doubts about the Government's ability and resolve to effectively manage the economy as exemplified by the recent depreciation of the Australian dollar.

At stake here is the credibility of the Treasurer (Mr Keating) and the Government with local and overseas financial markets and economic observers as to whether they can deliver on the various commitments they have made in economic policy. The Treasurer, who has been very good indeed at going around the board rooms and bourses of the world in a dark suit and talking about the collection of antiques, has presented a view of the Australian Labor Party to people here and abroad which is quite different from that presented during the previous period of Labor government. As we know, overseas investors had an opinion of a Labor government as one that sent people around with letters from Jim Cairns, or sent Khemlani over to borrow $4,000m. They thought members of the Government had Iraqi breakfasts. This was the general image of the Labor Party within the international, business and financial community. The Treasurer had an extremely difficult task in removing this image and, backed up by the Prime Minister (Mr Hawke), he went round all the board rooms and international conference tables to give a totally different impression of a Labor government. Basically what the Treasurer and the Prime Minister were saying was: 'We are not like Whitlam, Cairns, Khemlani or any of these people. We are sound economic managers. We have got the lunatics in our Party under total control. All the left wing fourth graders are people that we can put our finger on. We have got the trade unions, which caused immense damage under the previous Whitlam Government and also during 1981-82 under the Fraser Government, under control because we have got them constrained by the prices and incomes accord, a solemn agreement which they have signed. We are also supporters of the financial deregulation begun by the previous Treasurer following the Campbell report. We have also got Labor governments in the various States, which are perfectly sensible, run by commonsense business type gentlemen who also wear dark suits and ties on public occasions. We are quite different from the previous Labor Government. You can trust us'.

That impression was successfully implanted here and abroad. I must say that if Australia has to endure a Labor government for any period that impression is very useful. Members of the Opposition supported those aspects of Labor policy, particularly in the area of financial deregulation, which were sound and in the interests of Australia. We are talking about what has happened to the dollar over the last two or three weeks and what has happened in international financial circles; we are not talking about the general decline of the dollar which would happen for good economic reasons, but we are talking about the very substantial and dangerous wobbles that have occurred in addition to that. I suggest that they are occurring and may well continue to occur because the Government has shown that it is no longer able to control those critical elements of its constituency which enable it to maintain this international and local image.

The first piece of evidence we have on this matter is the MX virus that infected the Left and then got through to the Centre Left. Members of the Centre Left made an attack on their Prime Minister. Under pressure abroad, in the course of an overseas trip without full consultation with his colleagues, leaving the Minister for Foreign Affairs (Mr Hayden) speechless in Sydney, the Prime Minister changed his mind on a critical aspect of our relationship with the United States of America under the ANZUS alliance. International observers could rightly ask: 'Is it possible also that the Treasurer will suffer a similar fate to that suffered by the Foreign Minister? Is it possible that the Prime Minister, under some similar kind of pressure from the Left, joined possibly by the Centre Left in a particular situation, will back down on a domestic commitment which is just as important as that external commitment to ANZUS?'.

I refer to the economic trilogy which is the centrepiece of this Government's forward economic plan. We support it insofar as it goes. We applauded it at the time. I must say that we expressed some doubt as to whether the Prime Minister had received full backing from his Cabinet on the matter. In fact, he had not. Nonetheless, he committed himself and that commitment to this trilogy has been noted by local and international communities. I remind the House that the trilogy is not to increase taxes at a faster rate than the growth in the economy, to reduce Government spending as a proportion of the nation's output and not to increase the Budget deficit as a proportion of the national product. Today in the House the Treasurer has tightened up that third element of that commitment by saying that the deficit will not increase in money terms. That was an important additional tightening of the commitment by the Treasurer in public today.

Mr Howard —It is contradictory to the Governor-General's Speech.

Mr CARLTON —It is, as my colleague the Deputy Leader of the Opposition said, contradictory to the Governor-General's Speech. Nonetheless, the Treasurer made this public statement here today. We note that. The Business Council of Australia, which had the same interpretation as the Treasurer, will be pleased to hear of that commitment. To this trilogy I add the not insubstantial additional commitment of not increasing the Medicare levy. That is the trilogy and that is a good set of commitments. It is as important to Australia's future as the commitment to maintain the ANZUS alliance is important to our external defence. If we can be seen to go back on a commitment under ANZUS at the first whiff of grapeshot, what price the trilogy? That is the first problem caused by the MX virus. The second element cited by the Treasurer and the Prime Minister under which they could say that they were different from the Whitlam Government is that the trade unions were contained by the accord. The accord states that regardless of our international trading competitiveness, regardless of the capacity of individual firms or industries to pay, wages overall will rise automatically with increases in prices. All the overseas experts know that that is not sensible in a competitive trading world, but they thought that that was the best that a Labor Government could do under the circumstances and they accepted that as evidence of good intentions. But what do we find on the accord? At about the same time as we have a backdown on the MX issue, we also have a Public Service strike which has immediate effects on the capacity to keep the promises of the trilogy because it immediately pushes up interest costs in the Budget, affects our external account and the flow of dollars in and out of Australia, causes further ructions in the value of the dollar but, most importantly of all, it tests the Government's resolve in maintaining the accord. What happened here is that the Public Service unions, as they were entitled to, went to the Australian Conciliation and Arbitration Commission and said: 'Under the anomaly provisions of the accord we are entitled to an extra 8 per cent on top of the national wage rises'. The Conciliation and Arbitration Commission exhaustively examined the claims of those public sector unions and said that the claim had no merit and that the 8 per cent could not be granted; indeed, no additional increase could be granted. Under the terms of the accord, on which the future of this Government depends, it was up to those unions, as part of the Australian Council of Trade Unions, as signatories to the accord, to go back to work and wait for the national wage case. If at a subsequent point they wished to raise some other matter, so be it. However they did not do that; they went on strike. The Government did not follow the accord either. It allowed the national wage case to proceed and it also suggested that there be a behind the scenes deal with the public sector unions to allow an anomalies increase.

So, just as the Government did with ANZUS, just as it did with the MX and just as it will do in countless other areas where there is pressure from one of its own constituencies, it will cave in. It is on those grounds that we say that the Government's credibility in local and international financial markets is crumbling and that its capacity to maintain this whole framework of economic responsibility is rapidly disappearing. Everything the Treasurer said today by way of past history is of no account when nobody can trust the Prime Minister or the Treasurer.

Madam DEPUTY SPEAKER —Order! The honourable member's time has expired.