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Thursday, 7 November 1985
Page: 1693


Senator MICHAEL BAUME(10.19) —The Australian public has been misled, not simply by the Government but by the fact that the Government managed to con the press gallery in this place and the media in general throughout Australia about the consequences for the ordinary Australian of its tax package, which is now described as the package of `nasties'. It was, Mr Deputy President, as you will remember, part of a deal that the Government did with the Australian Council of Trade Unions. It was the bribe to get the ACTU to agree to a genuine package of tax reform which involved reduction in personal income tax to be offset by rises in indirect taxes. The Treasurer (Mr Keating), having gone to the barricades over the importance of this whole tax package under instructions from the ACTU in a secret deal his Prime Minister (Mr Hawke) did with the unions, was forced to withdraw the important part of that package, the reform part of that package, and instead was left simply with the bribe.

Let us examine the extent to which the people of Australia have been conned by this Government as a result of this Government having influenced, I believe improperly, the media, particularly the press gallery here. As an ex-journalist I am obviously sensitive about criticising the media. It may well be that the media has failed to respond to clear evidence of the way in which it was conned because it may well be embarrassing to admit that it is less than perfect. But let me stress the nature of this deception by this Government. The Government's booklet on the tax package contains a little table which shows the benefits-the so-called benefits-to the Australian taxpayer. The newspapers, on the day after the tax package was announced, ran headlines which generally stated: `There are nasty things, but you are still better off'. That is the important issue. The Government managed to convey through the media the impression that Australians would be better off as a result of tax reductions in this tax package. That is simply false. It is disgraceful that the Government should seek to con the media, but it is equally disgraceful that the media has not recognised publicly that it was conned.

Let us see what the con was. As we all know, the deal done with the ACTU by the Government involved the Government reneging on an undertaking it made at Budget time that it would discount wages for the impact of the devaluation of the Australian currency. This was a proper undertaking that it gave at the time. The Treasurer pointed out that it was essential for Australia's health that wages be discounted at the next wage case-in fact, at subsequent wage cases-for the effect of the devaluation of the currency, because that devaluation showed that we had been living beyond our means, and we should not as a nation be compensated for living beyond our means because that simply perpetuates the problem. Having made that undertaking, he was forced, of course, as with his indirect tax package, to withdraw it when he was instructed to do so by the ACTU, through his Prime Minister, the former head of the ACTU and the man who, above everyone else, is responsible for the wages push in the 1980s which so destroyed Australia's competitive position and so damaged our balance of payments position.

The reality is that this deal done by the Government with the ACTU involved, as I said, reneging on an undertaking to discount fully the impact of devaluation. A deal was then done with the ACTU which involved a discount next April which would be totally offset by a tax cut the following September. The ACTU said: `In that way the workers will not be disadvantaged'. In other words, there will be no effective discounting because it will be offset by a tax cut. Real take home pay will not be affected. In other words, the ACTU has won the battle to ensure that there is no real discounting and that we will continue to live beyond our means. That is an absurd and damaging decision. Whilst the media may not be able to recognise that that decision has resulted in a con by this Government, it is one which at least the money markets of this world recognise as a con. They have responded appropriately, particularly now that the Australian Conciliation and Arbitration Commission has established itself as a rubber stamp of deals done secretly between the ACTU and this Government.

I want to put to the Senate very strongly that if the ACTU is correct in asserting that a $2 billion tax cut is the necessary offset to the 2 per cent discounting in the next wage case, clearly the Australian taxpayer is receiving no benefit whatsoever because the Australian taxpayer is the Australian wage earner. So we have the clear situation: The deal done with the ACTU by this Government does not bring any benefit in terms of a tax cut because it simply offsets next April's discounting of the wage rise. In other words, there is, I stress, no benefit whatsoever. Yet, when we had the announcement a few weeks ago we saw this Government putting out documents talking about a benefit without having the honesty to stress that, in fact, that benefit would be offset by the 2 per cent discounting next April. Where does that leave the remnants of the current tax package, the $800m of nasties that will belt the Australian people, particularly Australian small business and Australian farmers? According to a perceptive article in the Sydney Morning Herald this morning, it will belt the 40 per cent of Australians at work who are, as I understand it, involved in superannuation of some kind or another because superannuation funds will of course receive a disadvantage as a result of this tax package.

It seems to me that it is inescapable that the $800m of `nasties' is an added burden on our community. They are there simply to pay the price of the deal this Government has done with the ACTU. We have established quite clearly that there is no overall benefit. The tax cut will be totally offset by the 2 per cent discounting of next April's wage rise, so there is no benefit there. All we have is the disadvantage-the $800m of cost of the deal done with the ACTU. How can the media perpetuate this rubbish that even though there are `nasties', overall one is better off? How can this Government sit here straight faced and put out official documents pretending that the people of Australia are better off when it knows darn well that they are not better off? The Australian people will be $800m worse off as a result of this deal, which, as I have said, was secretly done between this Government and the ACTU, which the Government has an extraordinary and unhealthy desire to get into bed with.

Whilst the media may be reluctant to recognise the cost to the Australian people of this secret deal, the money markets of the world are only too well aware of it. It seems to me that when we are looking at what is happening to the Australian dollar we can relate that disaster directly to the consequences of government policy, of government attempts to deceive. Certainly the markets respond to that kind of deception in an appropriate way; they simply refuse to believe this Government. Its credibility has gone. The Treasurer has gone overseas to try desperately to hold up the money markets. Did he have any material or any significant facts to give overseas to bolster the Australian dollar? The simple answer is that he did not. The Treasurer's visit overseas in fact showed how bare and how lacking in comprehension this Government is of the consequences of its actions, how bare its intellectual cupboard is in the area of economics. The judgment of the world markets on the Australian dollar has resulted directly from this Government's own policies.

Over the last couple of days the Minister for Finance (Senator Walsh) has been asked in the chamber whether there is going to be any revision of the Budget forecasts and, if so, when such revisions will come out. We have heard that the Government may be provided with revisions to Budget forecasts by next February, but who knows whether they will be made public. The reality, as I see it, is that this Government must come clean with this nation and the money markets reveal the extent of the downward revision in matters such as the current account deficit that must inevitably result from what is happening now. I believe that unless it comes clean on these vital areas, which have a terrific impact on Australia's inflation rate and have an enormous impact on our competitiveness and therefore are of great significance in terms of our future economic health, and indicates to the markets what the real consequences of these changes are as it sees them, uncertainty will remain over the fate of the Australian dollar and, therefore, over the fate of our economic future. It is all very well for the Government to pooh-pooh suggestions that unless we have better economic management this nation could be on a South American-type slide. We need that better economic management. We must remain at risk unless the private sector has greater confidence in this Government than it has now. Certainly it needs to have greater confidence in the Government's economic management skills.

At last the bareness, the phoneyness and the deception involved in this Government's courting of business are being exposed by its actions and incompetence in the economic area. As I have said, what we need and need quickly from this Government is a revision of the current account deficit expectation. Last year our current account deficit hit a record low of $10.2 billion. This year the word is being spread around that it will be about $11.5 billion. In other words, the Budget forecast of the situation being only slightly worse will be shot by at least $1 billion. The Bureau of Agricultural Economics has forecast a fall in farm exports of about a quarter of a billion dollars. The level of imports has maintained a much greater rate than the Government forecast. This Government, if it wants to be believed, had better come up with some facts. The sort of nonsense that the Treasurer spoke overseas simply exposes the bareness of the Government's economic policy and the failure of its basic policies, such as the accord, to deal with the real problems facing Australia.