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Thursday, 5 December 1985
Page: 3013


Senator FOREMAN(1.35) —Mr Deputy President, today I want to make a few remarks about the 1985-86 Budget and the economic environment in which we find ourselves-a happier environment, both socially and economically, than the one present when the Hawke Government brought down its first Budget in 1983. Let me for a moment briefly describe what conditions were like when the Hawke Government came to power in 1983. It is essential to understand the predicament Australia was in at that time and the measures that the Hawke Government has taken to bring about a dramatic reversal of Australia's fortunes since then. The condition of the Treasury in March 1983 is best summed up by saying-it is from a well known nursery rhyme-that Mother Hubbard's cupboard was bare. I suppose that it is really best described as Mother Howard's cupboard being bare, and it was becoming barer by the moment. Not only was the Treasury empty but it was also mortgaged. The last time Mr Howard was in control of the nation's finances he was already about the business of privatisation, or selling off the nation's assets. He was mortgaging the future of our country with the largest increases in the national debt Australia had ever witnessed.

Consider for the moment the figures at June 1976. Commonwealth borrowings stood at $20 billion but by the end of the Fraser-Howard period this figure had risen to more than $39 billion. Despite all the rhetoric about reducing deficits, reducing the size of government, promoting economic growth and much more, the Fraser-Howard years were a disaster. It should be pointed out, though, that some efforts were made in the early years of the Fraser Administration to come to grips with the economy. Full credit must be given to the former Treasurer, Mr Lynch, for attempting to control the deficit. But when Mr Howard took over economic caution was thrown to the wind. Mr Howard's five years added some $13 billion dollars to the deficit, or a full third of the entire national debt. He added $13 billion of the $19 billion increase over all the Fraser years. Had the public of Australia not been presented with the untimely but fortunate opportunity to pass judgment on the Howard economic morass in March 1983, a further $10 billion would have been added in the next Budget. The fact of the matter was that Mr Howard had lost control of the situation. As Michelle Grattan in the Age of 8 December 1982 noted in an article entitled `Budget deficit soars to $4,000m':

The Federal Government's $1,674m budget deficit has blown out to an enormous estimated $4,000m in less than four months.

Despite massive increases in spending, despite regular assurances that the good times were near at hand, employment prospects from 1975 to 1983 became progressively bleaker. Unemployment eventually rose to more than 700,000 by the end of the Fraser Government's life. The Fraser-Howard Administration failed to produce even the rhetoric, blaming overseas conditions, the drought and the unemployed. The level of inflation was over 11 per cent and showed no sign of easing. A wages pause became the catchcry; the solution to the woes that beset the Government. In reality it was simply a clutch at a straw, and was seen to be such in March 1983. The level of inflation in the Fraser years was like the level of unemployment; there was always a promise that soon things would be better. These promises, of course, are now filed away with the naive expectation that the Australian electorate might wish in some near time in the future to hear them once more.

One of the saddest parts of the latter Fraser-Howard years is that it was obvious that the Government had lost control. Instead of management we were presented with indecision. This indecision was felt by industry and the community. I refer to an article by David Potts, economics editor of the Australian, on 15 December 1982. He stated:

The Government has officially disowned the Budget and is now forecasting the worst economic downturn since the Great Depression.

Potts went on to say in the same article:

The Treasury now predicts the economy will shrink by 2 per cent in real terms this financial year, its Budget estimates was `some decline'.

A fall in real gross domestic product of 2 per cent over the year would be the worst since before the war.

In 1974-75, widely regarded as a year of recession, the gross domestic product grew by 1.2 per cent. In 1961-62, the `credit squeeze' year, the gross domestic product grew by the same amount.

The worst year for economic growth in the post-war years was a fall of 0.8 per cent in 1952-53.

David Potts also passed judgment on another aspect of the last Howard Budget. He summed up what most of the community was feeling at that point:

The vagueness of the Budget forecasts compared with the quite explicit new estimates is likely to refuel speculation that the Budget figures were fudged.

The speculation was refuelled and finally the truth was starting to emerge. Again in the Age of 15 December 1982 Michelle Grattan, in an article entitled `Howard's gloomy forecast for 1983' summarised Mr Howard's latest Budget update as follows:

Australia's gross domestic product is expected to be down about 2 per cent this financial year and private business investment is likely to fall by 15 to 20 per cent. Private consumption is likely to show little, if any, growth. The housing industry will continue to worsen and unemployment is likely to be 10 per cent in February.

When the Hawke Labor Government came to power in 1983 it was faced with a crisis in the economy which was unparalleled since World War II. It was not that it was an economy that was deep in recession; the problem was that its whole direction had to be reversed because it was diving deeper into recession by the day. The Hawke Government had a vision of an Australia that could be prosperous once more, an Australia that could be employed once more and one that could be confident of its future. It was this vision that lay at the foundations of the first Keating Budget-an Australia where profits as well as decent and justifiable wage levels could exist hand in hand; an atmosphere where investment would be encouraged because of positive signs of growth; and an atmosphere in which 500,000 more people would be employed in the first three years. The accord followed and despite the jeerings of those opposite it has been the mainstay of the unprecedented growth that has been achieved ever since its introduction.

Confrontation, the real name of Liberal industrial relations, has been replaced with consultation and a period of industrial harmony; a harmony under threat only in the non-Labor States, and chiefly Queensland in which the recession continues unabated. The trade union movement and employers, as well as many other interested parties, took part in the National Economic Summit Conference because goodwill on all sides demanded a change of course. The period of growth that has followed the Hawke Government's coming to office has been astounding. The target of 500,000 jobs is well on the way to reality, with more than 444,000 already created. The third successive year of strong economic growth will see Australia experience a 4.5 per cent growth in gross domestic product this year.

The 1985-86 Budget seeks to continue and re-inforce the developments of the last 30 months. One specific target for this Budget has been the priority that has and must be given to the youth of Australia. The details of this scheme merit some note because of the sheer size of its vision. In 1985-86 some 10,000 16- and 17-year-old school leavers will be offered traineeships. By the Bicentennial year, 1988-89, the number will be expanded to 75,000. The cost for 1985-86 will be $15.7m. The traineeships will last a minimum of 12 months and include at least 13 weeks of instruction in relevant courses in appropriate institutions. The remainder of the time will be spent in on the job training. For employers to be eligible to take on trainees, stringent requirments first have to be met. Employers will need to demonstrate that they can provide high quality job training and pay the appropriate trainee wages. It is important to note that the new trainee system has evolved from the recommendations of the Kirby Committee of Inquiry into Labour Market Programs. Furthermore, it is being introduced following wide consultation with Federal, State and Territory governments, trade unions, employer groups and youth organisations. Contrast the positive steps the Government has taken in this direction with the suggestions emanating from the Opposition quarters. The most original suggestions from the Opposition so far call for cuts in youth wages so that sweat shop labour can once more return. This is not a solution, merely a way to exploit a sad situation which sees higher youth unemployment than there ought to be. It is designed to test supposed economic solutions on a social group with the least say in its own defence.

This step is the thin edge of the economic wedge. The deregulation of youth wages is the first step towards total deregulation of the labour market and the consequent erosion of hard fought for living standards. Mr Howard is not satisfied with his attempts between 1978 and 1983, and now he wants a chance to show what he can really do. The Opposition is on the path towards the total destruction of just wage awards established over many years. Mr Peter Shack, formerly the Shadow Minister for Employment and Industrial Relations, stated in an article in the Australian of 14-15 September 1985 on the dispute involving McDonald's Family Restaurants in Western Australia:

In response to concerns about high youth unemployment, the Western Australian Industrial Commission decided in July this year that employers who are able to create jobs for young people in addition to their present workforces, could hire them at less than award rates.

There can only be winners as a result of this ruling, not losers.

Young people who are presently employed will continue to be paid at existing award rates.

Unemployed youth will get a crack at jobs that did not, and would not, exist except for the Western Australian Industrial Commission's ruling.

Even if all of the winners are winners, some will clearly be winning more in their pay packet each week than others. Of course it will not be long before this two-tiered system of employment gravitates to one level and formerly employed and unemployed youth will get a crack at a job-naturally the one with the lightest pay packet. Mr Shack's wisdom in employment-some might call his cynical exploitation-is now to be seen in the education portfolio as the result of the recent reshuffle.

The fiscal management in this Budget is also exemplary. The Budget provides for growth in employment as well as reduction in the deficit to $4,900m. It is important to note that such projections in the last two years have been on target despite the detractors who, when they had their chance, muffed it. The growth outlay has been kept to our trilogy of promises. This Budget estimates that gross domestic product will rise 4 1/2 per cent. Real household disposal income will rise by 3 per cent after tax and average weekly earnings will also rise by approximately 8 per cent, despite the bouyant economy and the depreciation of the Australian dollar. Inflation will be pegged to about 8 per cent. The growth in employment will mean a decline in the number of employed, from 8.7 per cent in June 1985 to 7.5 per cent or 8 per cent by June 1986. The fall in unemployment will mean a decrease in the actual monthly average number of unemployed from 581,700 in 1984-85 to 540,000 in 1985-86.


The DEPUTY PRESIDENT —Order! The honourable senator's time has expired.