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Tuesday, 12 November 1985
Page: 1976

Senator WALTERS(4.l9) —In the past fortnight as the Treasurer, Mr Keating, tripped around the world telling the overseas money markets that he was the greatest, the value of the Australian dollar fell. The further he went the further the dollar fell. As he went from country to country, the Australian dollar fell further. Back in Australia, Senator Walsh and Mr Hawke were telling the men who keep one hand on the telephone and make millions as the United States dollar and the United Kingdom pound rise that they did not understand the Australian economy. They told them that if they did they would be showing confidence in and buying the Australian dollar. Still the Australian dollar fell.

Who does not understand the Australian economy? Perhaps it is the Government. Certainly, the kings of the money markets understand it. They understand that Australia is simply spending more than she is earning. These are the facts. Let us look at the increase in interest rates. I have a table which shows the real interest rate on small trading bank overdrafts from June 1960 to June 1985. Just after the Liberal-National Party Government left office the nominal rate was 14 per cent. It is now 15.5 per cent. The real interest rate was 2.5 per cent in 1983. It is now 8.2 per cent. Under this Government the average real increase in government spending is 4.9 per cent per year, more than double the Fraser Government's average. Government outlays in 1985-86 are estimated at 29.8 per cent of gross domestic product, the third highest in Australia's history. The first and second highest rates were in the first and second Budgets of the Hawke Government. This year's outlays are equalled only by the last of the Whitlam Government's outlays.

Our overseas debt has increased. I have some figures from the Parliamentary Library. In 1983 our external debt was $36,493m, 22.1 per cent of gross domestic product. This year, under this Government, it is $68,466m, 33.1 per cent of gross domestic product and the highest on record. Let us look at what we are paying for this external debt. After all, it is of vital interest to Australians. Interest payments on our external debt were $2,630m or 1.6 per cent of gross domestic product in 1982-83 when we left government. They have virtually doubled. They have increased to $4,815m or 2.3 per cent of gross domestic product. What a wonderful Treasurer we have! Mr Hawke told us that Mr Keating is the best Treasurer in the world. Mr Keating has been saying: `I am the greatest.' The Reserve Bank of Australia commented in its annual report that by the end of 1984-85 most interest rates had risen substantially with many rates at historically high levels, both absolute and relative to the rate of inflation. So much for the pre-election promise of Mr Hawke and Mr Keating that interest rates would fall in 1985. Is Mr Keating the greatest Treasurer? He is still saying: `I am the greatest.' He is still saying to the world money markets: `Have faith; I will not panic, I will not budge. Just buy; have faith in us.' The money markets are turning the other way and the Australian dollar is falling.

Per head of population our overseas debt grew from $1,571 in June 1983 to $3,326 in June 1985. The situation is incredible. For every man, woman and child in June 1983 our overseas debt was $1,571. It is now $3,326. Interest rates are the highest ever recorded, at a time when we need export dollars urgently. What is the Government doing about it? There is no doubt that high interest rates work against businesses borrowing to build exports. With very high interest rates and bad industrial relations, what hope has business got of competing on the open market? We have only to look at the Mudginberri dispute. The Mudginberri abattoir lost millions of dollars just because it and its employees came to an agreement between themselves which suited them both. It gave the workers more money and enabled the boss to export more. Yet the union decided that the agreement was not in the union's best interest. It put a ban on all exports. Mr Hawke did not direct his inspectors to cross the picket line. He allowed the situation to continue until the company lost its export market.

I was part of a delegation to Japan not so very long ago which was looking for longer term trade commitments. I was there primarily on behalf of Tasmanian companies which wanted such commitments. The Japanese said to me very clearly, everywhere I went, that they would not dream of giving us longer term trade commitments. They said: `You are not a reliable supplier.' The operators of the woollen mills said that never again would they close because our storemen and packers were holding up their wool, as they did in Melbourne. The Japanese woollen mills closed then because we were not able to fulfil our commitments. Now the Japanese deal with many other countries and will never again, they assure me, import only from Australia. They deal with many other countries so that they have reliable sources of import.

Mr Keating has decided, when we have problems with high interest rates and a falling dollar, when we need exports and when business needs to be confident, to tax business. His timing is incredible. I cannot imagine how he could have dreamt up such a stupid thing to do when the economy is in this situation. He has told us that he will introduce a capital gains tax. He is going to tax the employer for benefits that are paid to workers. A 3.8 per cent wage rise which has resulted from a sweetheart deal between the Government and the unions has been rubber stamped by the Australian Conciliation and Arbitration Commission. At a time when our economy is screaming for more exports our greatest Treasurer of all time has decided to tax further the employer.

It is good rhetoric for the Labor Party to say: `The employer pays the benefits and we will tax the employer'. That is wonderful stuff! If the Labor Party had the courage of its convictions it would say that the person receiving the benefit is the person who should pay the tax. But, no, the Government goes around the Labor Party branches saying: `Comrades, we will make the boss pay; we will not make you pay the tax'. This is jolly good rhetoric. The Labor Party needs jolly good rhetoric because if we cast our minds back not so very long ago we will remember the rather unsuccessful Tax Summit. Mr Keating told us that there would be no compromise and that he would not budge from his tax White Paper. Late one night in a hotel room Mr Hawke did a deal with the Australian Council of Trade Unions and sabotaged the Treasurer. He whipped the rug from under Mr Keating's feet. So the Tax Summit collapsed. As the news- papers said, the Government's tax package crossed the finishing line with all wheels off.

Mr Keating and the Labor Party have to take to their branches around the country rhetoric which suggests that some new tax legislation is on the way. It is good rhetoric for the Government to say to left wing Labor Party branches in particular: `Comrade, we will not make you pay but we will make the bosses pay'. We have not yet seen the legislation to give effect to these changes. As Senator Michael Baume just said, how can business possibly plan when such legislation has not been introduced? The Treasurer made several announcements several months ago. He has been tripping around the world trying to sell what he is about to do as something that is very responsible. The overseas countries are saying: `You are kidding. What you are doing is murdering your business and we are not going to show confidence in you'. As I said, the further Mr Keating went, the further the dollar fell. How can business plan when such legislation will not be introduced until next year? How does business know what is going to be in that legislation? How will it know how far the legislation is going to be watered down and what will be charged? Yet business will have to make decisions in the next three to four months. The Government is hoping that business will be able to boost the economy a bit. However, as I said, there is no way that business can plan for that at the moment.

The balance of payments figures were released this morning. We know that exports fell by 4 per cent while imports rose by 9 per cent. The balance of payments figure has reached an all-time record-minus $1,641m. It has gone up by $575m since September 1985. What an incredible situation! Yet the Government is saying that people should be confident, that people should show their confidence by boosting the dollar. The only body that is liable to boost the dollar is the Reserve Bank of Australia as it hops in every now and again to try to save face for the Government.

One of this morning's papers carried the headline `The dollar is set for a further slide'. If the Government does not change its allegiance with the ACTU, if the Government is not going to govern with a responsibility to all Australians, not just the ACTU, we will soon be bankrupt. There is no doubt that so long as we continue to earn less and pay ourselves more this country and its economy will just not survive. Another newspaper carried the headline `Low dollar pushes up house building costs'. The cost of building homes is rising out of all proportion. For instance, electrical fittings showed a spectacular 17.9 per cent rise in the year to August. The ordinary men and women are gradually finding it quite impossible to fulfil their dream of owning a home. As I say, unless the Government changes its allegiance with the ACTU under which that organisation calls the tune, this country will slowly but surely go bankrupt because it will not be able to pay the interest on its overseas debts.