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Thursday, 17 October 1985
Page: 1376

Senator PETER RAE(10.58) —I support what has been said by the Opposition on the Loans Bill 1985. It is called a loans Bill, but in fact is a loans and appropriation Bill and I believe in its effects may have been better titled the Khemlani affair avoidance Bill, because that is the impact of it. As has been explained by Senator Messner and also by my colleague Senator Watson, this Bill is contrary to the practices of the Parliament, contrary to the spirit of the Constitution, and an attempt to by-pass the Parliament to enable the Government to govern indefinitely, subject to the constitutional requirement of election, but without having to resort, day to day, year to year, to the Parliament in relation to funding. All this is coming from the Party which brought the electors of Australia the Khemlani unauthorised loans affair, the Iraqi breakfast affair, the highest public debt ever known in this country-right now-and the highest real interest rates in the history of this country. This Bill is now being brought forward at a time when constant expressions of alarm are coming from all sectors of the community regarding public debt. The cost of servicing that public debt is now averaging $35 per week for every taxpayer in Australia.

Senator Townley —And it shows no sign of getting any better.

Senator PETER RAE —It is increasing at an exponential rate.

Senator Haines —That is the worst sort.

Senator PETER RAE —It is, as Senator Haines says. It shows no sign of getting better but is getting worse. Let me refer not to what I say, but to some of the well-known commentators and authorities. I quote from the Australian Financial Review of 16 October 1985. Noel Bushnell, in an article entitled `More experts focus on Australia's external debt', states:

The growing body of literature on Australia's external debt gains another title with the first joint effort of two more prominent Melbourne economy watchers published today.

The Australian Chamber of Manufactures and the National Institute of Economic and Industry Research devote six pages of October's Economic Focus, to this subject which in the past three weeks has engaged the attentions of the ANZ and National Australia Banks in different ways.

The article goes on to say that economic focus tends towards the National's view and states:

The combine notes that Australia's total level of debt, at 33 per cent in 1984-85, is now below the internationally accepted danger mark of 40 per cent of gross domestic product.

But it adds that the debt service ratio (interest plus repayments as a proportion of exports of goods and services), at 33.6 per cent last year, is well above the considered critical point of 25 per cent.

Further, NIEIR-

that is, the National Institute of Economic and Industry Research-

projections put the debt service ratio at 43.7 per cent this financial year and 48 per cent next year.

That is confirmation of the interjections by both Senator Townley and Senator Haines and is contrary to the interjection by Senator Walsh. The article continues:

The combine says increases in external debt and the debt service ratio can lead to reduced international confidence, significant currency depreciation, higher interest rates and the need for contractionary economic policies-the kind of experience many developing countries are having.

That is not a very nice picture to be drawn, yet it is consistent with the projections made by the Government itself and the Treasury in the Budget. I believe that for this Government to attempt to bring, as I said, a Khemlani affairs avoidance Bill before the Parliament at this time is to stretch the credulity of the Parliament and the public to its extreme. Whilst Senator Siddons referred to the fact that the Australian Democrats were aware of this, so too was the Opposition-before there was discussion-concerned about it. It is not a matter of saying who was first-rather, thank goodness attention was paid to the matter in the Senate. I congratulate and support those who have spoken before me, including Senator Siddons. I am delighted to know that there will be a combine of attention to this attempt to avoid the normal processes of the Parliament. The Bill introduces in clause 3, as Senator Watson said, in a very quiet and apparently innocent way, this provision:

. . . `prescribed year' means-

(a) the financial year ending on 30 June 1986; or

(b) a later financial year.

That means any year in the future, at any time.

Senator Dame Margaret Guilfoyle —Every year.

Senator PETER RAE —Every year, as Senator Dame Margaret Guilfoyle says. Then it provides in clause 6 that the Treasurer may borrow money to the sum which he considers necessary for expenditure from Consolidated Revenue in that prescribed year and the amount by which it is likely to be less than the amount of the expenditure made, and to be made, from the Consolidated Revenue Fund in that year. In other words, whatever the deficit is, from nothing to the total amount can be borrowed.

Senator Jessop —It is open-ended.

Senator PETER RAE —It is an open-ended borrowing capacity. This is not just a loans Bill. It is an appropriation Bill as well, because clause 8 provides:

The Loan Fund is appropriated to the extent necessary for the purposes of this Act.

The Bill gives the Government power to borrow indefinitely during any prescribed year, which means in any year in the infinite future. That money would be appropriated automatically as a result of this legislation. Then we have a provision which I think is a lulu. It seems to be an absolute beauty if one does not look at it carefully. The Bill provides in clause 9 for a limitation of expenditure, which sounds good enough if we read only the first part of clause 9. But if we look at the second half of clause 9 we find that sub-section (1), which is a limitation states:

. . . does not affect the expenditure of money appropriated under the heading `Advance to the Minister for Finance' in a relevant Act for a prescribed year.

All that is needed is one appropriation for the Minister for Finance in one year and then, under that definition, every year thereafter is a prescribed year-into the infinite future.

Senator Jessop —It is escaping proper parliamentary scrutiny.

Senator PETER RAE —As Senator Jessop says, this is an attempt, I think an unworthy attempt, to avoid parliamentary scrutiny. It is as well that there is a unanimous approach on this side of the chamber that it is not good enough for a government to be allowed to get away with this. This is what I think the Senate is for, and is doing. I support what Senator Messner and my other colleagues and Senator Siddons have said. I look forward to the amendments being made during the Committee stage. (Quorum formed)