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Monday, 14 October 1985
Page: 1138

Senator SIBRAA —Can the Minister for Fin- ance advise the Senate of the results of the Government's review of the so-called loan back arrangements made by the previous Government under which Telecom Australia was allowed to retain part of its annual employer superannuation contributions to the Commonwealth?

Senator WALSH —When Telecom was first established in 1975 the funds for its capital expenditure were provided in the Budget. At some later time, if I recall correctly, there was a mixture for capital funding of internally generated funds, Budget funds and funds borrowed. The borrowed funds, whether they came from the Budget appropriation or not of course would be counted directly or indirectly in the public sector borrowing requirement. Telecom, along with a number of other statutory authorities, has also paid annually to the Commonwealth a contribution to cover the superannuation liabilities of the Commonwealth superannuation scheme which is responsible for Telecom employees. Those payments by Telecom are regarded as financial transactions and do not therefore affect the Budget deficit. I expect to be making a comprehensive statement before very long on not only Telecom's superannuation arrangements but also those of other statutory authorities.

However, in 1978 when Mr Howard was presenting his first Budget, he resorted to fiscal chicanery to achieve a cosmetic reduction in both government spending and the deficit. The practice that he adopted then continued until 1982. The practice he adopted was to loan back notionally to Telecom the contributions it had paid into the Commonwealth superannuation scheme to cover the liability. The loan backs were interest free loans which had no contractual basis, for which there was no formal repayment obligation and which were never authorised by Parliament. The purpose and effect of that prime example of shonky accountancy was to conceal the true size of the deficit and the public sector borrowing requirement. By the time Mr Howard was removed from office during the 1982-83 financial year, he had deceitfully concealed in total some $500m of what should have showed as both the deficit--

Senator Puplick —I raise a point of order. Use of the word `deceitful' in relation to an honourable member in another place is quite unparliamentary.

The PRESIDENT —Order! I must admit that my attention was diverted for one moment. If the Minister used that expression in relation to an honourable member in another place I ask him to withdraw it.

Senator WALSH —If that is regarded by you as unparliamentary, of course I withdraw it, Mr President. Perhaps I could say that he unmanfully concealed--

Senator Button —And wrongfully.

Senator WALSH —He wrongfully concealed in aggregate $500m which ought to have appeared in the deficit and on outlays, in the public sector borrowing requirement or a mixture of both.

That was the situation which this Government inherited. In the 1983 Budget the arrangement was formalised by the present Government and Telecom was required to pay interest on that so-called loan back arrangement. In 1984 further loans were discontinued and repayments of the loans advanced during the Howard period as Treasurer have commenced. As I said earlier, I expect to make a more comprehensive statement on this matter, certainly before the Parliament resumes, in which, in a more formal way, I will expose the fiscal chicanery to which the discredited former Treasurer resorted in order to distort, conceal and misrepresent the true level of Commonwealth outlays, the deficit and the public sector borrowing requirement.

Senator Peter Rae —Mr President, I raise a point of order. For the same reasons as were given before, I seek to have the word `chicanery' and the other words withdrawn, particularly in view of the fact that, as Senator Walsh well knows, evidence in relation to that was given to a committee of which he was a member at a public hearing before his Party took over government.

The PRESIDENT —Order! I think that the use of the word `chicanery' does impute dishonesty on the part of a member of the Parliament. Therefore, I ask the Minister to withdraw the expression.

Senator WALSH —If that is your wish, Mr President, of course I withdraw.

The PRESIDENT —It is my wish.