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Friday, 29 November 1985
Page: 2596

Senator McKIERNAN —Has the attention of the Minister for Finance been drawn to criticisms of the level of Commonwealth public sector outlays under the Hawke Government? Do those criticisms have any merit? Is there any linkage between privatisation and the level of public expenditure?

Senator WALSH —In response to the last part of the question, I do not see that there is any linkage between privatisation and the level of public expenditure, although I notice that some people appear to believe that there is. For example, I have here a copy of a letter from Senator Jessop, addressed `Dear Colleague'.

Senator Cook —Table it.

Senator WALSH —I do not think I should table it without Senator Jessop's approval, because it is after all his letter, and he is not present. It says:

It seems to me that in order to promote `privatisation' we need to recognise that the concept is a relatively minor segment in the overall objective of reducing public expenditure.

In South Australia, the promotion of privatisation has been a counterproductive exercise; however, it remains to be seen whether this can be overcome during the few days left before the State election.

In order to effect economic recovery in Australia, three matters need to be dealt with in an aggressive but well considered manner:

1. Reduction in public expenditure (of which privatisation-curse the word-happens to be a relatively minor element).

And so on, and so on. I find it quite distressing that decadence, disorder and disunity have reached that point in the Liberal Party at which a member of the Liberal Caucus cannot even write a private letter to one of his colleagues without it being leaked on the same day as it is written. That is symptomatic of what has been going on in this divided, squabbling and feuding Liberal Party for at least the last six months.

Senator Button —He is one of their best thinkers.

Senator WALSH —I agree, Senator Button. He has identified privatisation as being a counterproductive stunt in the context of the South Australian election campaign. People in South Australia, as elsewhere, and particularly country people, do not really want to pay higher telephone charges and electricity and mail charges. People anywhere do not want to have the Commonwealth Bank sold off so that their housing loan interest rates go up, as Mr Howard, among others, has advocated. I find it interesting, however, that in writing this letter Senator Jessop has repudiated not only Mr Olsen but also his own Leader and his own Leader's policies. Perhaps that was his intention.

As to the first part of the question relating to criticisms of Commonwealth public sector outlays under this Government, this matter was raised by Senator Chaney on 8 November. I promised that I would calculate for Senator Chaney what outlays as a proportion of gross domestic product would have been had the peak level of unemployment in 1982-83 prevailed throughout the entire 1982-83 financial year. I am able to tell Senator Chaney that had that been the case and there had been a 10.3 per cent level of unemployment throughout 1982-83, outlays on a no-policy-change basis would have been 30.8 per cent of GDP-that is, equal to the highest level of outlays ever recorded-in spite of the fact that most of the electoral bribes which the Fraser-Howard coalition offered in the 1982 Budget were election bribes in the form of tax expenditures rather than outlays. The economic impact of the two, of course, is ultimately the same, except that tax expenditures when first introduced have a deferred cost in the following financial year.

The reason why outlays would have been as high as 30.8 per cent had unemployment throughout 1982-83 been at its peak level of 10.3 per cent is that unemployment benefits, because of the higher number of unemployed, would have increased automatically, by something like $400m and GDP, because of that much higher level of unemployment, would have been about 3.6 per cent lower. This is just another example of the importance of the very substantial influence that the prevailing level of unemployment has on the percentage of outlays as a proportion of GDP in a no-policy-change situation.

Senator Cook —Mr Deputy President, I take a point of order. Can the Minister table the document from which he was quoting?

Senator WALSH —I will quite happily table the letter. I would like to have got Senator Jessop's permission.

The DEPUTY PRESIDENT —The Minister is entitled to table the letter.