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Monday, 21 September 1987
Page: 367

Mr PEACOCK —Will the Treasurer agree that, if the Government had shown political courage and followed Senator Walsh's advice to cut expenditure further, this would have accelerated the pace of adjustment on our external account and prevented Australia from going further down the Argentinean road?

Mr KEATING —Senator Walsh has never put any views in the Cabinet to the line that outlays should be cut further. The fact is that this Government has brought the starting point deficit down since June 1986 from around $8 billion to zero. As such, that is the biggest change in fiscal policy of any country Australia may be compared with; that is, $5 billion cuts on recurrent outlays, $2 billion on receipts-mainly from base broadening and from compliance-and $1 billion on assets. That is the reason why, following the collapse in the terms of trade in late 1985, early 1986, the Government has made such a rapid response and that is why the response has been greeted so enthusiastically in the markets.

I also refer the honourable member to his own Press statement of a week ago in which he said that he would be re-examining the funding elements of the Liberal tax cuts and their introduction. He said that it is just not a matter of credibility; it is a matter of sensible economics. I put a statement out saying that of course he was dead right. It is worth recalling that the impact of the coalition's policy would have been to have wiped out $2 1/2 billion of base-broadening measures and to have added $2.7 billion in this current financial year from tax cuts, which would have left us with a deficit of $6 billion. Under this Government it is zero. I do not think one can put the point more eloquently than to say that this Government has faced all its responsibilities. Senator Walsh was making no criticism of the Budget aggregates. All he was doing was giving us a run again on his long run views on certain expenditure programs, views which have been broadly rejected in the Expenditure Review Committee over eight sessions.