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Thursday, 7 November 1985
Page: 1717

Senator MacGIBBON(12.33) -The Senate is dealing cognately with three Bills which deal with total appropriation this year by the Government of about $69,000m. The important part of the estimates of expenditure that are presented is the bottom line, which shows that we will spend $5 billion more this year than we will take in in income. I believe that $5 billion is a very conservative estimate. Given the policies this Government is following, that amount will blow out, and it will probably blow out to $6 billion or $7 billion. There is a belief in Australia that deficits do not matter, but running a country is exactly the same as running a business or a family household. One has to earn the money to pay one's debts. Somehow or other, under the big spenders of the Australian Labor Party, the belief has been sold year after year, so that it is now entrenched in Australian folklore, that we can spend up big, it does not matter, there will never be a day of judgment. It did not matter in the past when Australia had a lot of money in the bank after good Liberal administration; but after three years of the incompetence of those opposite we do not have any money in the bank and money has to be found somewhere.

Under the brilliance of the boy Treasurer, Mr Keating, we are spending $13m a day more than is coming in. That is roughly $100m a week. The only good thing that can be said about this 1985-86 Budget is that the projected deficit is a little lower than it was last year. Last year, according to the Treasury documents, the actual figure was $6,700m. The year before that, though, we had the record for Australia of $8 billion. I refer to the point that has often been made by Senator Walsh, and it was made this morning by Senator Maguire. I do not know whether it is done out of dishonesty or stupidity, but they talk about the losses--

Senator Messner —Both.

Senator MacGIBBON —It might be both, as Senator Messner says. The biggest loss under the Fraser Government was $4.4 billion. That figure happens to be on page 396 of one of the documents brought down this year by Treasurer Keating. The year before that, the loss was $0.5 billion. The average loss for the seven Fraser years was around $2.5 billion, but in the three years of the Hawke socialist Government we have seen losses of $8 billion, $6.7 billion, and now, hopefully, we will have a loss of only $5 billion.

The Australian public and the children of the Australian public have to pay off these debts. The very great problem we face is that the members of the Australian public do not realise that those debts are hanging like lead weights around their necks. They do not realise that this Government has been borrowing to the hilt overseas to pay for the debts it has run up, and that is the real killer. We now owe a huge amount of money to overseas bankers and to overseas institutions. We have simply lived beyond our means. We have spent money we do not have. We have not spent that money on building new Snowy Mountains hydro-electricity schemes or in developing any income-producing assets. We have spent that money on soft living. We have met our daily living expenses by borrowing. The Australian public does not realise this and it does not realise the extent of this $68 billion debt that hangs around our necks.

Mr Deputy President, do you realise that only 15 years ago Australia owed $3.5 billion? Today, it owes $68 billion. That debt has risen by 43 per cent since this Government came to power. Roughly one-third of all our export earnings this year will go on paying the interest alone on overseas borrowings. On the projections the Department of the Treasury has made, working on an exchange rate of 70c to the United States dollar, it has been estimated that by the end of this financial year 43 per cent of our export earnings will be going just to pay interest-not to paying off the capital and not to paying off the borrowing-but just to pay the interest on what we have borrowed.

As Senator Messner so eloquently said earlier this morning, the exchange rate is collapsing and although we are now paying one-third of our export earnings in interest and it is projected that we will be paying 43 per cent by the end of this financial year, we could be looking at a figure in excess of 50 per cent of all our export earnings going to pay off the profligacy of the Labor Party. That leads me to the crux of the matter. It is not so much the amount of money we have borrowed as our ability to repay it that is the real killer. Under the policies of this Government, and partly due to the overseas markets, our ability to repay is poor, and it is declining day by day. We have borrowed money for soft living and our ability to pay it off and to service it, to pay the interest on it, is diminishing day by day. How has all this come about? I guess that, historically, the true origins go right back to the Whitlam years when, like a bunch of kids getting into a sweet shop, members of that Government took off on a wild spending spree. They lacked the ability to control the unions. We had the notorious blowout of over 10 years ago--

Senator Messner —Who was President of the trade union movement then?

Senator MacGIBBON —It was a fellow called Mr Hawke. I was just coming to the point of quoting what Mr Hawke's economically responsible views were. In August 1974, when Mr Hawke was President of the Australian Council of Trade Unions, after an approach had been made to him to moderate his wage claims for his greedy unions, he said:

We know inflation is at 16 per cent and we believe it's quite likely to reach 20 per cent in the next two quarters. But we will not indulge in a trade-off in wages for some conjectural reduction in inflation.

The legacy of inflation took unemployment figures from the 1.8 per cent that the Australian community had enjoyed under a succession of Liberal-National Party governments preceding the Hawke regime, up to the 9 to 9 1/2 per cent levels that we have seen since. The level has now fallen to about 8.8 per cent. Under the Fraser Government we had seven years of responsible policies-gradually winding back the debt position of Australia and gradually improving the competitiveness of Australian industry. That was blown out by the wild men of the Hawke Government because the Cabinet and the Caucus of the Hawke Government still contain the big spenders. They are unable to learn the lessons of history. They are unable to learn the history of all Labor administrations in Australia since Federation; that is, they are big spending, big borrowing, irresponsible governments in an economic sense. This Government is the biggest borrowing and the biggest spending government in Australia's peacetime history.

I return to the point that there are chilling portents for Australia in the diminished ability we have to service the great debts that this Government has dumped upon the Australian people and the Australian economy. Despite what those on the other side say, the internal economy is not in good shape. The strategy of the Government has been to run a series of expansionist Budgets but, unfortunately, the rest of the world has no confidence in them. That is the real reason the exchange rate now is so disastrous. It is because the informed community overseas does not value the Australian dollar at much more than about US60c to US65c. I believe, regret- tably, that the dollar will go down even lower. To try to solve the problem the Government has had to follow a tight monetary policy. Australia now has the highest real interest rates since the Depression. The real interest rate, of course, is the difference between the inflation rate and the nominal rate that is charged. With the reduction in the inflation rate that has taken place through diminished economic activity, we now have these huge real interest rates that make it very difficult, if not impossible, to stay in business, let alone expand, and make it very difficult for the Australian taxpayer to buy a house. The situation will get worse because, as the dollar goes lower and lower, the Government will tighten the screws, as its socialist comrades have done in New Zealand, increasing interest rates as the Australian dollar goes down to lower and lower levels. What went wrong? Firstly, Labor overspent wildly. Secondly, the Government failed to make Australia competitive by freeing up the labour market and doing something to get down the extraordinarily high costs of labour. The third thing the Government did wrong was to seek a soft and easy option by floating the dollar through a covert devaluation. The fourth thing the Government did wrong was to provide no incentive at all to business, and I use the word `incentive' in its broadest sense.

I have dealt with the overspending side of the Government's strategy-the $5 billion deficit and the average $6.5 billion deficit which it has been running since it got into power. The second point I raise is Australia's competitiveness in the manufacturing industry and the need to control labour costs. The cost of employing labour in Australia today is probably the highest in the world. We have very high wages, but it is not the wages that pose the real problem; it is all the add-ons that follow-workers compensation, holidays, statutory holidays, sick days and the superannuation that is now coming in through the unions, covertly, which is a deferred payment. The add-on cost to employing labour today would approach 50 per cent of the nominal weekly pay. Quite simply, we cannot afford it. We have to free it up.

What we have to do in this country is not legislate for and support more and more union power, as this Government is committed to doing, but unleash the great human resources in Australia. An enormous number of people in Australia are prepared to work, and work efficiently, if only they can get to the work place. If they can get to a situation in which they are happy to work under terms which suit them and which, at the same time, suit an employer. What we have in Australia at present is a domination of the economy by the big unions. The big unions are running a monopoly on the supply of labour. This fits in very well with the doctrine of the Government, because its holy trinity is that we need big government, big business and big unions but we do not need small entrepreneurs, small business people and, above all, individuals because they just clutter up the scene which is dominated by the big three. I seek leave to continue my remarks later.

Leave granted; debate adjourned.