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Tuesday, 2 May 1989
Page: 1590


Senator CHANEY (Leader of the Opposition)(5.24) —The Senate is to have a very brief opportunity to debate the economic statement put down on 12 April, both in this place and in the House of Representatives. The debate on this statement has proceeded partly in the Parliament. The Hon. John Howard responded on behalf of the Opposition on the day after the statement was made. Of course, there has been considerable debate in the media. That debate has been notable because of the uniformity of the criticism of the quality of the statement and its relevance, or really its irrelevance, to Australia's very pressing economic problems.

Any debate we have now in the Senate will simply be a reflection of views which have been put abroad a great deal and which have been given greater currency by the rather childish response of the Treasurer, Mr Keating, to the criticisms which he has received. In fact, the statement made on 12 April marked the end of Mr Keating's reputation as an economic manager. I think that reputation has been dead in the community for many years. I think in the suburbs and towns of Australia, where people have actually felt the effect of Mr Keating's so-called `economic magic', there has been very little doubt that he is a failure. It is probably true that, until very recently, many economic commentators have been fairly respectful of him. In particular, the Canberra Press Gallery seems to have shown a considerable respect for him. I would suggest, in opening this debate for the Opposition in the Senate, that that is more a tribute to his thespian skills than to his skills as a Treasurer. As I have said, I think he has been on the nose for years in the community and at last economic commentators are seeing through him.

The statement reflects that, at a time of very considerable economic difficulty for Australia, Mr Keating has actually given up. I think he has ceased trying to tackle the problems that we have and is now following a purely political course. His reaction to the adverse economic criticisms he has received has been classic Paul Keating. He has simply turned on his critics. He has reserved his special venom for the Sydney Morning Herald, but he has managed to have a few passing shots at the Australian on the way through. I would like to refer to that, because I think it is a reminder of the person we are dealing with and of his preparedness to eschew serious debate on serious matters in favour of personal abuse.

On 13 April in the House of Representatives Mr Peacock brought forward a matter of public importance on living standards and referred to an editorial in the Australian. Mr Keating referred to that editorial as having been `written by a rabid right winger'. When Mr Peacock referred to Paddy McGuinness, Mr Keating's comment was, `He is just as mad'. When Mr Keating himself responded in the debate, we found the same sort of comment. Poor Mr McGuinness was referred to as `the jilted guru'. When Mr McGuinness was referred to as writing in the Australian, Mr Keating said, `He can prosper with this right wing rot'. Probably the most offensive comment was that made with respect to the economics editor of the Sydney Morning Herald, Ross Gittins, who was first said to be somebody whom Mr Keating admires. Mr Keating then went on to say:

the sad thing about Ross Gittins is that he does not have the personal courage to write what he actually believes.

I think there could be nothing more offensive to a serious journalist than to have that comment made about him, particularly by the Treasurer of the country.

It is, of course, a simple and classical `shoot the messenger' response, which is typical of the abuse which the Opposition has certainly had to take from one of the foulest-mouthed politicians we have. It is interesting to see him extending his range. Mr Keating repeated his insulting remarks about the Sydney Morning Herald, and Mr Gittins in particular, at his press conference on 18 April when he again made the same allegation in these words:

Gittins and these people know this, they know it to be right but don't have the courage to write it because they don't want to look like they are supporting me.

He went on to say:

. . . the Sydney Morning Herald . . . has poisoned the whole reception of economic news in the city of Sydney and the State of New South Wales. The whole analysis is flawed.

I refer to that, because it is typical of one of the most distasteful elements of this Government. Such a totally cynical statement-I call it `a totally cynical statement' because it is a statement clearly rooted totally in politics which does not come to grips with our economic difficulties-is an attempt to frighten people off and to prevent the sort of analysis which is necessary. I would like to remind the Senate that the history of this statement is quite well known and I think widely understood in the community. It was last year that Mr Keating said that he was to have a wage-tax deal with the Australian Council of Trade Unions (ACTU). Honourable senators may recall that he went so far as to suggest that that deal may well include the fact that there would be no wage rises at all this year in return for the moderation in inflation which he wrongly predicted and in return for the tax cuts which he said would apply from 1 July.

It is important to remember that at a time when tax cuts were both needed and appropriate-and I refer to a period more than 12 months ago-the Government made the totally cynical decision to withhold tax cuts from wage and salary earners in the interest of the Government having a capacity to bring down a large tax cut just prior to an election. I do not think there is any thinking person or objective observer who denies that that was the timetable, the program and the motivation of the Government. When in this chamber we produce figures which show that Australian families have paid an increasing proportion of their income in taxes, we see that that has been accelerated, increased, exacerbated by a government which has been prepared to hold back on necessary tax relief purely to try to set itself for an election.

It was rather to be expected that one would get the cynical response to the April statement which was evident in the community. Any media attempt that I saw to interview members of the community and to get their response to the April statement produced a totally cynical response from those who were interviewed. People knew that the tax cuts would be eaten up, if they had not already been eaten up, by interest rate rises, that any wage rises would be eaten up by further inflation, and that they would wind up worse off, not better off. The totally cynical response of the people of Australia to this statement is a reflection of the totally cynical approach which has been adopted by this Government with respect to economic management over the past year, and a quite criminal failure to come to grips with the real economic dangers that we face. It is in that circumstance that those who dare to criticise are traduced.

I do not have time to go through the various comments made by financial journalists and journalists generally on this statement which have brought forward the abuse to which I have referred, but I wish to make quick reference to some of those matters. Though I have heard Labor members complaining about members of the Opposition in the Senate today quoting from what other people have said, I think it is important to see that it is not merely the Opposition which has been a constant critic of this Government's economic policies or which has taken issue with the Government at this stage.

The first matter to which I wish to refer is the speedy diagnosis immediately after the statement that the tax cuts which had been provided by the Government still would leave families, and indeed everybody, paying higher taxes than they were paying at the time this Government came into office. The truth is that within a very short period the Government has taken over $10 billion in additional taxes and is giving some $5 billion back. The most hard hit people in the community-those people who have children and whose position has been identified by the Institute of Family Studies as being the hardest hit in the community, medium income people with dependants-will still be worse off than they were when this Government came to power and will still be comparatively worse off than other people.

The sorts of comments which have been made and which have brought forward the response to which I have referred are as follows. One reads `Keating hopelessly lost in blind alley', which is one of Mr McGuinness's early observations. The headline in the Hobart Mercury was `Keating heads for economic limbo'. The Sydney Morning Herald of 13 April, the day after the April statement, offered a general condemnation of what had been done. It said that the statement `was an exercise in crisis management, made necessary by the Government's misjudgment of the strength of domestic demand'. The Australian's comment on the next day was that this was `a package for the ACTU, not Australia', and that the Government had disqualified itself from running the Australian economy. Mr McGuinness made the statement, `Ideology is always a substitute for thought in the Labor Party', and Mr Gittins's comment was:

I read and re-read the mini-Budget in search of Paul Keating's economic strategy. Since I can find none, I conclude that the new strategy is: cross your fingers.

One could go on and on because there has been an absolute welter of comment explaining why independent observers, not political observers, believe that this Government has totally failed to come to grips with the serious problems that we face in Australia. I put some emphasis on this because it is important to see this as part of a wider pattern of an approach to government which is thoroughly destructive.

I remind honourable senators opposite that it is typical of the way they behaved with respect to Mr Ian Temby, for example, who was appointed as the Director of Public Prosecutions with a great deal of Labor praise and who, when he made independent decisions prosecuting some Labor personalities, constantly became an object of criticism. He was obviously regarded with suspicion and with something like contempt by some members of the Labor Party because he did his duty. I remind the Senate of the way in which officers of the Department of Aboriginal Affairs and the commissioners of the Aboriginal Development Commission have been treated. If they have dared to disagree with the prevailing views of this Government, they have been traduced or sacked. It represents an attempt to override all criticism by the use of whatever means are at hand. I believe that it represents a very serious stepping back from the proper traditions of government in this country and from a proper approach to government.

What the critics are saying, and what the facts bear out, is that what this Government has done in the April statement is to disclose that it has no strategy for solving our economic problems. That is simply demonstrated. At a time when everybody knows that the debt situation and the balance of payments are at the heart of our crisis, the sad fact is that our exports are declining. At the same time our imports are rising. Our imports went up by some 20 per cent and our exports fell by about one per cent. Just as critical and indeed central to the reason why these things are happening is the fact that our productivity is falling. Again, there is a great deal of debate about that, but the truth about productivity in Australia, if one looks at it from the point of view of what we produce per person employed or from the point of view of a combination of labour and capital output, is that we are declining while our competitors increase their productivity. In those circumstances it is not surprising that interest rates are kept sky high and that families are being squeezed. It is these fundamental things which are not being dealt with by this Government.

One virtue of this debate is the fact that it has drawn Mr Keating into the debate in a way in which he has not been drawn before because he has been challenged so widely. I was interested to see what he had to say in reply to his critics in the Sydney Morning Herald when they gave him an article in that newspaper which was published on 28 April. I do not intend to try to dissect the technical matters which the Treasurer deals with, because I found in that article one sentence which seemed to me to bring out, with blinding clarity, the real problem we have and the area this Government should be attending to. I quote what Mr Keating said in the Sydney Morning Herald on 28 April:

There is really only one message that can be drawn from our current circumstances . . . It is, simply, that our current account deficit is too high because we are spending more than we can produce.

I do not believe that there is anyone in this Senate who would disagree that that is a fair summary of our problem: we are spending more than we can produce. If that is Mr Keating's view of our problem one would have expected that the April statement would direct attention to the solution of that problem. The truth is that that problem is not mentioned in the April statement. Certainly there is nothing in the April statement that suggests that the Government is seriously addressing itself to that vital question.


Senator Michael Baume —It will worsen it.


Senator CHANEY —As my friend Senator Michael Baume interjects, in fact, it is going to worsen it. Mr Deputy President, I think that there are a couple of questions that need to be asked if one accepts as I do, and as I think the community would accept, that Mr Keating has accurately diagnosed our problem as being one of spending more than we can produce. One might ask: What is happening to production under the policies of this Government? What is being done to facilitate production and remove areas of waste and inefficiency? Let me deal very quickly with the question: What is happening to production? Are we, in fact, on an increasing scale of production, or is the movement in the wrong direction? Just after Mr Keating put down his statement we had preliminary production figures released by the Australian Bureau of Statistics for March. What those figures show is that in 18 of the 27 industries for which seasonally adjusted estimates are given, output is declining. In other words, at a time when the Government acknowledges that we are not producing what we wish to consume, that we are spending more than we can produce, the current figures show that there is a declining level of production in about two-thirds of the industrial items which are produced in Australia.

I put out a press release on that on 27 April in an attempt to draw the attention of the people of Australia to that rather sobering reality. It was not I think until 1 May, just yesterday, that in the Financial Australian the writer Mr David Potts drew attention to just how serious that deficiency is. In an article which pointed out that we have the risk of a crash landing rather than a hard landing in the economy, and after reference to the fact that two-thirds of the 27 main industrial items produced in Australia recorded large falls, he went on to make this point:

You're probably wondering, as I am, how such an obvious economic turning point could lumber past the press gallery, which normally pounces and pronounces on any statistic that moves, without so much as a by-your-leave. But it did.

Perhaps the Canberra literati, or the economic illiterati might be a better way of putting it, have become so convinced by the nonsense that the economy is over-heating, when the real problem is that industry is not competing. It cannot comprehend that the threat to Australia is stagflation.

And so it goes. That is what is happening to production. Our production is falling. What is being done to make our production rise? The sad answer to that question is that nothing is being done which could be done to make our production rise; indeed, the Government is locked into a situation where those things which obviously could be done are going to be blocked by its friends in the trade union movement. We had a glaring example of that when the Inter-State Commission produced its report on the waterfront and put forward proposals which, at a cost of some $270m, had the capacity in the view of the Inter-State Commission to make efficiency gains of some $600m per year. That report brought a speedy response from the Waterside Workers Federation of Australia which said that it would oppose the rearrangements which went to the membership and the power of the Waterside Workers Federation. Of course the ACTU came out in instant support of the Waterside Workers Federation. In a nutshell that is the problem which faces this Government and, whilst this Government remains in power, faces Australia. The truth is that there is a great deal that could be done to remedy the problems which Australia has and these are the matters which could have been made the subject of the April economic statement.

It is often said that it is easy for oppositions to be critical of what the government is doing or not doing; it is harder for oppositions to assert what should be done. I draw the Senate's attention to the fact that within 24 hours of delivery of the non-statement by the Treasurer, the Hon. John Howard, the Leader of the Opposition, laid down a list of essential reforms in his reply in the House of Representatives. He referred to the need to reduce government spending and stamp out waste and inefficiency; to the promotion of domestic savings and a more family-oriented tax system; a comprehensive program of privatisation and a more productivity enterprise-based industrial relations system; to a more flexible and entrepreneurial higher education system; to fundamental freeing up of our coastal shipping and the waterfront; and to reduced barriers to competition in many areas of telecommunications.

As a list, I do not believe that there would be an observer, commentator or economist in the country who would deny that reforms in those areas which will free up the productive capacity of this country and increase our output lie at the heart of solving our problems. For those of us who are concerned with improving the position of Australian families-before the conclusion of this speech I will refer to what that means in personal terms to the people of Australia-there is no avoiding the need for government to tackle that agenda of reform. This is not a time to be attacking the financial journalists who diagnosed the problems that the Government is refusing to tackle; this is a time for tackling those clearly identified areas of waste and inefficiency in the Australian economy.

At the same time as the Hon. John Howard delivered the response on behalf of the Opposition, he tabled in the House of Representatives a series of detailed proposals for reform in areas of the micro-economy. He tabled a paper entitled Contracting Out-A Means to Cost Savings and Better Value for Money in Government. Governments of all complexions around the world have shown that there are substantial areas of savings, there are substantial ways of eradicating waste by contracting out services which are currently being provided by the public sector. The time of this debate does not permit any detailed consideration of that paper, but I propose, with the leave of the Senate, to table in this chamber also the four papers which were put down by the Leader of the Opposition.

Leave granted.


Senator CHANEY —I thank the Senate. The paper on reform of the waterfront gets to the vital point that what is required is genuine competition on the waterfront if we are to get away from the tremendous waste in that area. The paper on coastal shipping gets to the nub of the matter by saying that coastal shipping will be opened up to foreign competition because at the moment coastal shipping represents an area of complete protection for the domestic industry and as in all areas of complete protection there is gross waste and inefficiency. In the area of award restructuring the Opposition puts forward proposals which will get away from the current proposals of the Government which will simply lead to further centralisation of the labour market and to a less flexible approach which will, therefore, be even less productive than the system that we are currently trying to break out of.

They are the sorts of specifics which could be done now and which could, therefore, be used to ease the position of Australian families and Australian taxpayers. What was pointed out in the Opposition response to what was put forward by the Treasurer in the April economic statement was that we have the highest inflation rate among major industrialised countries, we have home loan interest rates at record levels, we have a balance of payments in chronic deficit, our productivity levels are amongst the worst in the industrialised world, and the living standard of an average family has declined sharply over the past six years. Almost all of the major economic forecasts contained in the last Budget have gone hopelessly astray. I will quote John Howard:

At the end of the day:

families with children will go on paying too much tax

home buyers will continue to be squeezed by Labor's high interest rates

hard working Australians will continue to pay for Government waste

families will continue to pay more for everything because of Labor's high inflation.

There is, in fact, no relief in sight because of the April economic statement. It is accepted by the Australian people as reality-and it is reality-that already the high interest rate policies of the Government have robbed them of the benefit of the tax cuts which will not be delivered until 1 July and which will repay about half of the increased taxes which have been taken by this Government. It is accepted because it is so obvious that the wage rises which have been negotiated with the ACTU and which are not backed by productivity will, in turn, simply lead to greater inflation.

To mark the Opposition's view of the statement, or non-statement, which was made by the Government, I move:

At end of motion, add ``but the Senate-

(a) condemns the Government:

(i) for its failure to address Australia's fundamental economic problems,

(ii) because the Statement will do nothing to improve our abysmal productivity performance and will in all likelihood worsen Australia's competitive position, and

(iii) because, despite long overdue attention to some aspects of social security and tax policy affecting them, Australian families remain worse off than when Labor took office six years ago;

(b) further condemns the Treasurer's abusive and unfounded attacks on those who have dared to criticise his approach; and

(c) calls on the Government to reduce its reliance on monetary policy alone and, through reductions in its own expenditure and a genuine commitment to micro-economic reform, develop a balanced economic strategy for the benefit of all Australians''.

The tragic fact is that the April statement represents another lost opportunity for Australia. Those lost opportunities have been multiplying since the banana republic year of 1986. It was in that year that we had a temporary period of honesty on the part of Mr Keating when he correctly disclosed to the people of Australia the perilous economic course on which we are set. In 1986, because of the momentary honesty--


Senator Stone —The Prime Minister soon shut him up.


Senator CHANEY —As Senator Stone said, the momentary honesty of the Treasurer soon came to an end because of the action of the Prime Minister. It was followed by the limp-wristed, lacklustre address to the nation by the Prime Minister which simply failed to capitalise on the understanding in the Australian community at that time of the urgent need for change and reform. The improvement in commodity prices has temporarily masked the crisis that we face as a country. That temporary masking is falling away and we are again in a situation where the Government, in its April statement, has failed to meet the challenge that faced it and has thereby failed Australia. This is a sad statement which simply fails to live up to the responsibilities that are required of government.