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Wednesday, 13 November 1985
Page: 2093


Senator RICHARDSON(4.49) —I am intrigued, indeed fascinated, by Senator Brownhill's contribution. I find it remarkable that a senator from the National Party of Australia, of all places, could stand here and lecture the Government on interest rates. I can recall, in the very recent past, the former Leader of the Country Party, as it was then known, Mr Anthony, making a comment about interest rates. He said that they would drop below 8 per cent and, if they did not, he would eat his hat.


Senator Walsh —Did he?


Senator RICHARDSON —I do not know whether he did. I think he said he would do it in Martin Place, but I suspect that the hat remained uneaten. Fortunately, it will not be necessary for the Prime Minister (Mr Hawke) to change his dietary habits. I am not aware of his having made any such extravagant promise in that regard. I am aware, though, of promises made not only by Doug Anthony but also by Malcolm Fraser and John Howard about interest rates that were never met. Perhaps it has become too hazardous for politicians of any political persuasion to begin to be too definite.


Senator Michael Baume —John Howard never made that promise. That is untrue.


Senator RICHARDSON —I must answer that interjection, Mr Acting Deputy President, with your indulgence. I realise that John Howard never said anything about interest rates. He never said anything about anything in the end. He managed to spend so many years in the Treasurer's office. Never has a Treasurer stayed there so long to do so little. I, for one, cannot really criticise him for ever saying too much. As Paul Keating said, in the 1983 election campaign he was reduced to the role of a spectator. However, I want to say more about his role.


Senator Archer —But you said he did.


Senator RICHARDSON —I promise the honourable senator that I will return to him. He will only have to wait for a few seconds. I ask him to be patient. These days when one listens to honourable senators opposite talk about interest rates, the fall in the dollar and the tax package, one has to wonder what school of thought one is listening to. We have seen in the last few days that it is very difficult to know any more. In regard to all of the questions that we are debating today, one has to know whether one is talking to John Howard, Jim Carlton, Neil Brown, Steele Hall, Senator Missen or to Mr Macphee. They all have different views. I am finding it very difficult to keep up with them. It has become too hard for me. It has certainly been too hard for the Press Gallery. It gave up days ago.

In the last two days in a row we have seen John Howard, the Leader of the Liberal Party-I did promise Senator Archer to return to him-being rolled in the party room. He lacks control over his own Party. He cannot get up any more because, I am reliably informed by the numerous leaks that flow so liberally from the Liberal Party party room, Liberal senators have combined to do him over. They have combined with the National Party. The National Party is accustomed to doing over Liberal Party leaders. It has been doing it for years. It is practised. But in the last two days, in regard to the tax package, John Howard had to do a complete somersault because a few Liberal Party senators combined with their National Party colleagues to do him over in the party room.

Let us face it; I suppose that John Howard, having got to his position somewhat accidentally, will have to put up with those sorts of attacks pretty often. It is not only the reversals that are forced on him by the party room that concern me; it is his own reversals. We do not have to look very far in the past for such reversals. We have only to look at an interview he did with Steve Liebman on this morning's Today program. During the course of that interview this brand new leader of a brand new dry party, this dry liberal lot, was asked a question about a wages freeze. He was asked whether he would impose a wages freeze. He said yes, if the circumstances demanded it. I wonder, and I am certain many Australians are wondering today, what the Liberal Party really means when it talks about deregulation. What it means apparently is that on the one hand the Government can have no control, no role, it should be a spectator. But on the other hand we were told only a few hours ago by John Howard that if a wages freeze-in other words, a total wiping out of market forces-is considered appropriate by them, they will do it. One cannot have it both ways. The Opposition will be either a great little band of deregulators or it will be what it was for seven consecutive years in government-that is, a government that makes any socialist government look like a team of pikers when it comes to government interference in the economy. Time and again it intervened, and time and again it failed.

Let us look at the subject of interest rates which, I note, is one of the subjects of today's discussion. No other area of policy debate really highlights the confusion that is so evident in the ranks of the Opposition than policies on interest rates. Members of this brand new dry party-that is, those of them who are prepared to be called dry; there are others who want to be called wet-want market forces to determine the economy and interest rates. But when the market does determine interest rates, once again they want to intervene. Once again they want to abandon deregulation. They want to jump back in to a regulated economy. Once again one must say that the Opposition cannot have it both ways. On the one hand, it bitterly complains about interest rate levels. It urges governments to take corrective action. On the other hand, it urges governments to deregulate. I am now told that John Howard is even prepared to advocate the lifting of the ceiling of 13 1/2 per cent on housing interest rates. That would be a disaster, not just for a few Australians but for millions of Australians. It is not something that this Government is prepared to countenance, as the Treasurer has made clear day after day in the other place. It is something that this Government will not advocate.

Having mentioned housing interest rates, I point out that the housing industry is a good example of what some financial deregulation can mean. Innovations under the Labor Government-low start loans, variable rate loans, the secondary mortgage market-have emerged over the last three years. Let us look at the comparisons. In the last year of the Fraser Government there were 105,000 housing starts compared to 152,000 last year, and the figure is pretty steady at 140,000 this year. We deliver the goods. But that probably highlights the difference between this Government and the previous coalition Government.

Certainly it is true that interest rates have risen. No one on this side can run away from that point. Of course, I think I mentioned to Senator Michael Baume in a similar discussion last week that a search of the Hansard record revealed that it is pretty barren in regard to his contributions in complaining about rises in interest rates in 1982. Nevertheless, in 1982-83 when people were trying to borrow money and having to combat very high interest rates, why were they borrowing? They were borrowing, let us face it, in the midst of a crisis, in the midst of a recession. They were borrowing just to keep their heads above water, to stay in business.

Honourable senators should remember that that was the period in which bankruptcies were shooting through the roof. I know that that is still the position in Queensland today. But if one separates Queensland from the rest of Australia and looks at the States in which economies are run in any way sensibly, one sees that the number of bankruptcies is going down everywhere except Queensland. But under the coalition of which Senator Michael Baume was a part, in 1982-83 bankruptcies were soaring everywhere. People were in the market-place trying to get money in order to keep their businesses going, just to keep the doors open and to keep in place what jobs were left-those that had not been squeezed out of the economy. But today the contrast is pretty obvious. Why are people in the market-place still competing for money even if it is at high interest rates? The answer is simple: They are there to expand. They are borrowing money in the market-place in order to grow, to create new jobs, to add to the 400,000 jobs that we have created so far. The reality is that under this Government we have a growing economy. Honourable senators opposite just cannot handle that fact.

The exchange rate is the other alleged subject today, although I noticed that Senator Brownhill did not talk much about that. We were treated only to a speech about what is wrong with the rural economy. We were told that it all had to do with interest rates. Here is someone from the National Party who tells us that he gets around the bush. I concede that; I saw him at Gunnedah airport the other morning. I can testify to the fact that he does get out sometimes, as he can testify that I do. In looking at problems in rural Australia, it is pretty hard to accept a National Party senator telling us that it all has to do with interest rates without his making even the scarcest mention of the policies of the European Economic Community and the policies of the United States of America in dumping subsidised agricultural products in our markets. That was not even mentioned. Also not mentioned was what I said by way of interjection during his speech. Thirty years of National Party mismanagement of the trade portfolio got us into a mess in rural Australia. It will take a few years to get us out of it.

I return to the subject of the exchange rate, because unlike those opposite I want to try to keep to the topic and on course. I am far happier debating the topic today because this Government does not have anything to run from. We floated the dollar. Let us face it; that is something that John Howard advocated for years but, as has occurred in his party room in the last few days when he did not have the numbers, he did not have the Cabinet numbers to get support for it in those days either. But we did it. When we have a floating exchange rate, obviously it will float. It will rise and it will fall, but we do not panic every time there is a fall. We do not rush away and change course. We do not do what the Fraser-Howard Government did for so many years-promise a tax cut, a fistful of dollars, and take it away. We do not promise tax indexation, leave it with the poor fools, the voters, for a couple of weeks, and take it away again. We do not have to go on like that. The difference between us is that we have a real economic strategy. We do not have different groups racing out with different views on economic policy. We have a strategy in place to which we are sticking.

When we look at exchange rates, obviously on a day to day basis the market will be attracted to short term solutions and profits. The smart young men who gather in ritzy restaurants in New York, London and Paris and gamble with our dollar and other currencies look only at tomorrow. But the market has a habit of sorting itself out over time. It is on the question of fundamentals that this Government remains confident. We have succeeded in lowering the deficit. We got it down this year to under $5 billion, lower than I thought would have been possible given the continuance of the Government's economic strategy. It was done by being real about cuts, not by having phoney razor gangs that talked a lot and did nothing, but by setting about cutting government expenditure. It was a remarkable achievement, given what we inherited only two and a half years before.

We have kept a tight monetary policy, again something that the market over time demands. This Government is not prepared to move away from it. We have limited government borrowings-Commonwealth, State and local government. Jim Carlton, the shadow Treasurer, has in recent days, as one of his ways of getting out of this, urged the Commonwealth Government simply to slash funds to the States. That is something Senator Maguire might take back to South Australia. As the voters in South Australia go to the polls in the next few weeks they may want to ponder what the Liberals have in store for them. As usual, it is a tale of misery. We also have the accord. If short term factors are what governs the market, when the discounting of 2 per cent comes about next year no doubt we will see a jump in the dollar.

I would be remiss in my remarks today if I did not make some comment about an article that appeared on page 2 of today's Australian by Mr Des Keegan. That article has been quoted several times on the other side. The essence of Mr Keegan's strategy for Australia is that we would be better off having a recession. He talks about freezing wages, greater unemployment, and discipline in the economy. The Liberal Party's idea of discipline is to put people out of work. Four hundred thousand Australian's have jobs who did not have jobs when we came into government. Those 400,000 Australians will not thank any party that wants to put them back on the scrap heap. We have given them some dignity. We will keep them there. We will not listen to rabid right wing ratbags like Des Keegan.