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Wednesday, 27 June 2001
Page: 28704

Mr ANDREWS (3:08 PM) —My question is addressed to the Minister for Finance and Administration. I ask the minister to inform the House how and why the contingency reserve is utilised in relation to strategic investment incentives. Is the minister aware of any alternative approaches?

Mr FAHEY (Minister for Finance and Administration) —I thank the honourable member for Menzies for his question. Yesterday we saw an appalling lack of knowledge by the honourable member for Melbourne about basic budget processes when he described the contingency reserve as a `rainy day fund'—a piggy bank. The contingency reserve, which I might say was a mechanism used by Labor in their budgets—

Mr Tanner —Not like you, though.

Mr SPEAKER —The member for Melbourne!

Mr SPEAKER —The member for Melbourne chooses to defy the chair after I have asked him to adhere to the standing orders.

Mr FAHEY —It is a mechanism for ensuring that the aggregate estimates are based on the best information available at the time of the budget. It includes commercial-in-confidence, national security in-confidence items, allowances for estimating biases, parameter revisions as well as, of course, late decisions.

Opposition members interjecting—

Mr FAHEY —Well, funds are not appropriated for items included in the contingency reserve. The appropriation is made by parliament at the first available time so that funds can then be drawn down by the relevant agencies.

When it comes to strategic investment incentives, the Prime Minister announced— from memory, in December 1997—in the Investing for growth statement that incentives for appropriate investments in this country would be considered. The strategic investment incentives are contained in the contingency reserve.

Mr FAHEY —That guru from South Australia—at least he believes he is—has now said, `Why don't you put them in?' Well, it is very, very basic, and I would have thought you had enough exposure in your former life to know how basic it is. You do not state a sum of money that is available for anybody to apply for; otherwise they will ask for the lot. Quite clearly, you want to evaluate what are the competing programs—

Mr Tanner —Can you say that again?

Mr FAHEY —and you want to utilise what you might use to ensure what projects are appropriate. That is why you do not state the amount that is there, but it is then appropriated.

Mr FAHEY —If the honourable member for Melbourne took offence at the Christmas Island aerospace project, which will create several hundred jobs in an emerging, new, smart industry during its operation, then he has the right to vote it down when it comes in the additional estimates—just as he could have voted down the support under this particular project that was given to the Visy pulp mill, which creates 250 jobs, and a $450 billion investment in Tumut; just as he could have voted down, again another very smart industry, the Syntroleum gas to liquids plant that this particular program assisted which is a case of fuel technology value adding to Australia's currently underutilised gas resources; and just as he could have voted down the support that was given to General Motors Holden in Victoria where they wanted to invest something like—

Mr SPEAKER —The member for Melbourne!

Mr FAHEY —$400 million—

Mr SPEAKER —The member for Melbourne is warned!

Mr FAHEY —to develop a new fuel efficient engine for the car industry in this country, and this project supported it. That is what this particular fund is about and that is what it assists. It is appropriated and it comes through the parliament before it is drawn down by any department.

Is there an alternative? Mr Speaker, I can tell you this: there was no piggy bank when we got there. There was no `rainy day fund' that had money sitting in it. What we saw, despite the contingency reserve, was a total ignoring of any proper budgetary processes which led to some $70 billion of debt being run up in the last five years of Labor. So what we saw in the context of proper budgetary processes was a complete ignoring of those processes to the point that we inherited debt. We certainly did not inherit any rainy day funds, and all that we have done subsequently is to ensure that there is a proper, economic process under the control of this government that allows us to support emerging industries that are creating jobs in this country. And we shall continue to do so.