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Wednesday, 24 May 1989
Page: 2548

Senator MAGUIRE(10.40) —This morning we are having a cognate debate on the various Appropriation Bills of the Federal Government and on the Appropriation (Parliamentary Departments) Bill for the current financial year. These Bills provide funds for the remainder of the financial year over and above the funds which were budgeted for in August last year. They do not break any new ground; they simply provide extra finance for the operations of the Federal Government in the current financial year. The Bills are a confirmation of the overall direction in our economic policy, which is already in place. They offer an opportunity to discuss the Government's overall policy approach and, in particular, the question of fiscal policy; that is, policy relating to Government spending and taxation in Australia.

The Hawke Government's record on fiscal restraint is well documented and is unparalleled in Australian history. For example, in 1987-88, the previous financial year, the Commonwealth Government recorded its first Budget surplus, as distinct from deficits, in 35 years. It is a matter of public record now that that surplus is to be over $5,500m for this financial year. We are looking at a surplus again next year, and the indications are that there will be a surplus of significant magnitude. However, the figure for this financial year will be $5,500m. So there has been a massive turnaround in the finances of the Commonwealth Government. It is a matter of public record that the Fraser Government went out of office in 1983 with a prospective deficit for the 1983-84 financial year of some $9,600m, which is an enormous figure. So in total terms there has been a turnaround from a deficit of over $9 billion to a surplus this year of over $5 billion. After the next financial year, real Commonwealth spending-that is, Commonwealth outlays adjusted for price indexes-will have declined for four years in a row. There have been very strong financial stringencies in Australia with real cuts in Government spending for four succeeding financial years.

The Commonwealth Government has restrained its own activities. It has also brought about cuts in the borrowings and expenditures of the State governments. As a result of that, the totality has been a drastic reduction in public sector demands on the financial markets. For example, the public sector borrowing requirement is now a zero figure. When the Liberal Party left office in 1983 the amount of borrowing by the Commonwealth Government and the State governments was equivalent to almost 6 per cent of Australia's gross domestic product or Australia's national income. The figure was in fact 5.9 per cent of gross domestic product. The Liberals are saying that, despite these recent financial stringencies, despite the financial stringency of the current year and despite the prospective stringencies next year, further cuts in Government spending can and should be made. I would like to issue a challenge today to members of both the Liberal Party and the National Party to say where those further spending cuts could be made.

Senator Robert Ray —You will not get an answer.

Senator MAGUIRE —I will not get an answer, as my colleague Senator Ray has said. We have pared Government spending year after year since 1983. There are now no easy options in cutting Government spending, and it is all too easy for members of the Opposition to make these claims that further spending cuts should be made. Where would they make these cuts? Would they cut age pensions? Would they cut family allowance payments? Would they reduce the number of university places in Australia funded by the Commonwealth Government? We are still waiting for Liberal Party policies in a range of areas, whether they be tax policies, industry policies or expenditure policies. I ask specifically where those extra spending cuts would come. For example, on Tuesday of this week Senator Newman, one of the defence spokespersons for the Opposition, gave notice of a motion concerning the removal of a helicopter squadron from the Royal Australian Air Force. I think her notice of motion actually read that we were scrapping this particular helicopter squadron because there was too much priority being given to fiscal and budgetary matters. I must check the wording of that notice of motion, but I think I am correct in saying that. There is an area where $100m or $200m-I am not quite sure what the cost of refurbishment of those helicopters would be, but it is very substantial for each aircraft-would have been added by the Liberals to government outlays in the current financial year.

In my own State of South Australia, month after month we see Mr Alexander Downer, one of the dumped shadow spokespersons-and he claims to be a dry member of the Liberal Party and an economic rationalist-calling for higher expenditure in his electorate. Whether it be expenditure to improve television reception in the area by Commonwealth Government outlays being increased or whether it be other facilities for his area, including upgrading the railway track in the region, there is a classic case of a Liberal Party member of parliament calling in the local media for higher government spending and hoping that members of the Government will not notice it and that he can get away with it in his local electorate in the Adelaide Hills.

My colleague Senator Ray has now given me the wording of Senator Newman's notice of motion that was given here on Tuesday. I point out that subparagraph (c) of that notice states:

condemns the Government for its stupid decision to sacrifice defence capability to budgetary expediency.

She is a person who should know better. The front bench of this Opposition was supposedly reconstituted a fortnight ago. Here they are now saying that the Hawke Labor Government, its Treasurer, Paul Keating, and its Minister for Finance, Senator Peter Walsh, are placing too much priority on and giving too much emphasis to Budget factors in making these decisions. I hope that we do not have the spectacle of other frontbenchers in the Opposition moving motions in this place in respect of their pet areas.

Senator Robert Ray —It happened in respect of the ACT today.

Senator MAGUIRE —It happened again today, did it? There is a classic case again of more money being wanted for the Australian Capital Territory, I presume. I hope that we are not going to find individual shadow spokespersons in this rabble, this divided Opposition, calling for Government spending in their own favoured areas and the areas on which they focus. The notice of motion given by Senator Newman just nails members of this Opposition to the mast: they really want high government expenditure in their areas of policy speciality. I believe that this Government has tightened fiscal policy, government spending and taxing to the point where fiscal policy is carrying as much of the total burden as realistically can be expected in policy formulation.

It is important to note that under the Hawke Labor Government incomes policy has played a major role in regulating the Australian economy. The cost of recent wage increases in the public sector is included in the additional funds sought in one of the Appropriation Bills that we are debating today. I refer specifically to the 3 per cent national wage increase which appears in one of the Bills. The recent wage decisions and the wages-tax trade-off highlighted in the April economic statement are the cornerstone of Labor's success as economic managers in this country. When I talk about the incomes policy, I refer to the accord with the Australian Council of Trade Unions. That accord is the fundamental difference between the Labor and conservative parties in this country when it comes to the management of Australia's national economy. During the years of the previous Liberal Government economic policy was characterised by confrontation and division, by a tearing apart of Australia's national fabric, by an increase in unemployment and by a disastrous series of economic events, summarised by our lack of international com- petitiveness. I will certainly be debating that with Senator Stone this afternoon and acquainting him with a few of the factors contributing to the lack of Australia's economic competitiveness under the previous Liberal Government.

Labor's incomes policy is based on cooperation and consensus through the accord with the trade union movement. As a result of that economic policy, that managed increase in wages and incomes in the economy, we have seen a stark turnaround in the unemployment rate and in the job figures in Australia. For example, I am pleased to note that under the accord with the trade union movement, our economic policies have now resulted in the creation of over 1.4 million new jobs since 1983. People might say that is just a figure, but let us look at the scale of those 1.4 million jobs in relation to the population of this country. For example, the extra 1.4 million new jobs over the six-year period is equivalent to creating a new job for every man, woman and child in the cities of Adelaide and Canberra combined. That is what we are talking about.

Senator Stone —How many tens of thousands of dollars of foreign debt to go with each new job?

Senator MAGUIRE —Senator Stone, we are talking about the labour market at the moment. I wish that the Liberal Party would show some interest in the labour market in this country. I sit in this place week after week, month after month, waiting for an urgency motion congratulating this Government on the creation of jobs in this country, on the reduction in unemployment, on the creation of record numbers of job vacancies, but the Opposition will not bring one forward. It seems to think that economics is about financial variables, not about people. It does not seem to see economics and finance as having an end result, and that is creating employment and livelihoods for the Australian people. It is all about exchange rates, inflation indexes and financial variables, which are not really bottom line things in the economic system. They are parts of the economic system. Today I am talking about the fact that under this Government, 1.4 million new jobs have been created, equivalent to the combined populations of Adelaide and Canberra. Senator Stone's record, when he was the Government's chief economic adviser at the Treasury over the road, was the destruction of 186,000 jobs in the last years of the Fraser and Howard Liberal Government.

Senator Stone —No, that is not an accurate figure.

Senator MAGUIRE —They are accurate figures, Senator Stone; 186,000 jobs were destroyed around this country as a result of his economic policies and the advice that he gave Mr Howard and Mr Fraser when they were the economic Ministers running this country. It is a disgraceful record when 186,000 of our country men and women were thrown on the industrial scrap heap. They were thrown out of work by the policies of these people. Senator Stone is going to have the cheek to come in here this afternoon and lecture us on this side of the House about Australia's so-called lack of economic competitiveness. I am going to hand it right back to Senator Stone and the other members of the Opposition this afternoon, because they have got it coming to them.

It is the greatest exercise in hypocrisy that I have seen over a six-year period, since I have been here, to have people who destroyed jobs, who actually used unemployment as a tool in this country, lecturing us. That is all they did. They had no other policy, no incomes policy and no accord with the trade union movement-they used unemployment as a lever. They deliberately sat in their very cushy offices over in the Treasury and the Reserve Bank in Sydney and they used unemployment as a tool. They said, `How do we keep down the growth in wage rises in this country? How do we moderate wage cost growth in this country? The idea is to create the reserve army of the unemployed'. In a sense they were Marxists because they believed in the concept of the reserve army of the unemployed. They said, `If you are going to moderate wage growth in Australia, you create slack in the labour market', and that is what they deliberately went about doing under the Fraser-Howard Government. I am sure that was the sort of advice Senator Stone and the Reserve Bank were giving to the Government in 1982. What did we see as the result of that policy? We saw that the Government had to have increasing dollops of unemployment just to produce a given effect on the consumer price index. It said that it would fight inflation first and it found that month after month it had to create more and more slack in the economy because that policy just did not moderate price rises in the Australian economy.

Senator Stone —You simply have the facts wrong.

Senator MAGUIRE —Senator Stone is over there quibbling, but the facts are on the record. The Government had to squeeze the labour market more and more to produce a given effect on the price indexes in Australia. That is the reality, and that is why we won the election in 1983. People were asking last week in Canberra, `Why did John Howard get dumped from the leadership?'. I have been telling the Liberals for six years why John Howard would never be Prime Minister; because people in Australia remembered him as a failed Treasurer. That is what it is all about. He could not get legs as the Leader, because people around Australia remembered the fact that 186,000 people got thrown on the scrap heap in 1982 under the policies of the Liberals. Our consumer price index was out of control, and I will be talking about that this afternoon. I am prepared to repeat these figures this afternoon-an 11.5 per cent increase in prices in Australia when we came to office. That is the reality of the situation.

Maybe the Liberals think that Australians are fools and they do not remember. But when we talk to people around Australia about the problems the Liberal Party leadership had, the reply is always about that failed Treasurer, that man who drove the Australian economy into the ground, aided and abetted of course by Senator Stone, who is sitting here today trying to defend himself.

Senator Robert Ray —A case of mistaken nonentity.

Senator MAGUIRE —Yes, it was a case of mistaken nonentity. As I pointed out, 1.4 million new jobs were created in Australia over six years. Most of those have been in the private sector. Only 10 per cent have been in the public sector.

Senator Stone —Tell us about the foreign debt that goes with them.

Senator MAGUIRE —We will talk about that this afternoon, Senator Stone. Most of these jobs have been in the private sector. In fact, two-thirds of the new jobs have been full time positions. As a result of that there has been a massive reduction in the unemployment rate. When the Liberals left office and Senator Stone was sitting in the Treasury pulling the economic levers, unemployment was at the double digit level. In fact it peaked at a seasonally adjusted rate of 10.4 per cent during the recession in 1983. Now the unemployment level is not at those rates of the 1930s, which we were experiencing six years ago, it is in the 6 per cent range. So there has been a very tangible increase in job opportunities.

Senator Robert Ray —The participation rate has gone up.

Senator MAGUIRE —My economic adviser, Senator Ray, has pointed out that the participation rate has gone up. The point I was making, before I was given that very good piece of advice, was that despite the fact that the proportion of the Australian population wanting to work-that is the proportion of people in the labour force, the participation rate in the total population-has gone up enormously, our unemployment rate has fallen from double digit levels to around 6 per cent this year.

Senator Stone —Notwithstanding the fact that it has averaged higher during your Government than during the Fraser Government. Let us look at the facts.

Senator MAGUIRE —We have this incredible record, which is there for all people to see. I do not know why Senator Stone is trying to do some sort of Stalinist rewrite of history, but the facts are on the record.

Senator Stone —They certainly are.

Senator MAGUIRE —They certainly are there. Senator Stone, who represents Queensland, may not be in touch with the mainstream of Australian society. The unemployment rate in Melbourne is about 5 per cent. That is getting back to the levels of unemployment that we experienced in the 1970s in Australia.

Senator Stone —What has happened to the Victorian Government's debt too in the process?

Senator MAGUIRE —I think the Victorian Government has actually introduced some very enlightened policies which are showing significant results.

Senator Stone —Like the Victorian Economic Development Corporation, one of your other enlightened policies at that time.

Senator MAGUIRE —The Victorian Government tended to overcome some of the problems in the past, for example, the relative lack of public housing in Victoria. I think that housing for low income families in Victoria was one of the tangible ways in which the Victorian Government set about reducing unemployment in that State as well as providing shelter. It was very commendable.

Senator Stone —What is their housing waiting list today compared to six or seven years ago?

Senator MAGUIRE —Six years ago the conservatives adopted policies of industrial confrontation. If we summed up the conservatives' approach to economic management in Australia, it would have been to try to take on the trade unions. Their policies were policies of industrial confrontation, as distinct from the policies of consensus and conciliation in the labour market practised by this Labor Government under the accord. The results of those policies of conciliation are there for all to see. For example, there has been a significant reduction in the incidence of industrial disputes in Australia over the last six years. Days lost as a result of industrial disputes in Australia are now at relatively low levels. There has been a massive decline in the number of working days lost, of enormous benefit to employers and businesses. They are not faced with industrial disruption and their cost levels have come down as a result of the reduction in the number of strikes.

I am pleased to note that in recent years in my own State of South Australia the level of industrial disputes has reached the Japanese level. I do not hear any members of the Opposition calling out, `Well, that is really wonderful news'. Japan has always been paraded in front of Australia as being some sort of economic superpower, which it is, and, according to the Opposition, having very sensible labour relations policies. They are the sorts of things it puts forward. In States such as South Australia, because of policies under both a State Labor Government and the Federal Labor Government, we have policies of industrial conciliation and industrial cooperation and the incidence of strikes is now lower than in West Germany and approximately equal to the Japanese level. For that reason South Australia received the go-ahead from the Hawke Labor Government to develop the replacements for Australia's submarine fleet. I believe that one of the key reasons for my State of South Australia being chosen for the fabrication and assembly line site for the Australian submarine fleet was the very low industrial relations problems in that State.

One of the key policies we will be putting into place from 1 July will be the wage and tax trade-off to help reduce inflation. We are taking to the Australian people a round of personal income tax cuts, increases in family allowance payments, increases in family assistance payments and significant increases in pensions. As a result of the wage and family allowance payments we see that the Government can help play a significant role in reducing the level of inflation in Australia by granting higher after-tax income to people through government programs rather than encouraging workers to seek the same after-tax income through large wage rises. We see enormous benefits for businesses and employers in Australia and for Australia's international competitiveness in going down that road and awarding significant tax cuts rather than encouraging very large wage rises.

One of the most important things to mention is the increase in family allowance payments and the further increase in the family allowance supplement. It is very important to note that since the Menzies Government introduced the original child endowment payment of five shillings a week in about 1940, and under the various programs that followed on from that, no government in Australia has ever adjusted family allowance payments or child endowment payments for increases in the cost of living. We know that families spend those allowances typically on food and clothing for their children. Those allowances in the past have never been protected against the increase in the cost of living. From January next year the Hawke Labor Government will make the first ever cost of living increase to family allowance payments and to the new family allowance supplement payments. The dependent spouse rebate provided for on the personal income tax form will also be adjusted for inflation. As a result of those measures, employees will find from 1 January, in subsequent months, very significant increases in their after-tax income and their family disposable income effectively equivalent to quite significant wage rises. Those increases in family allowance payments and wages will be equivalent to about half the cost of the wage rises employees otherwise would need to get from employers.

The trade union movement, through the accord with the Government, has agreed to keep wages growth to about 6 1/2 per cent next financial year-an unprecedented figure when we consider that Australia's economy is booming and growing very rapidly. Normally in such circumstances we would find extraordinarily large wage rises occurring, but the Government has an agreement with the trade unions to keep wages growth to about 6 1/2 per cent next financial year. We calculate that, as a result of the tax cuts and the increased family assistance payments, employees will obtain increases in their after-tax income equivalent to wage rises of about 12 per cent. We are saying that it is better to give tax cuts and increase family allowances than to boost wages directly-that helps the competitiveness of the Australian economy-but the bottom line is that these tax cuts will produce wage-equivalent rises next financial year of about 12 per cent. There will be a very large increase in household purchasing power next financial year as a result of these increases. It is a pity Senator Stone has left the chamber; I was half way through giving him a lecture on economics a while ago.

Senator Puplick —He left the chamber because he has nothing to learn from you.

Senator MAGUIRE —That would also apply to--

Senator Puplick —Giving lectures to anybody like Senator Stone.

Senator MAGUIRE —Senator Puplick can eat his heart out. No-one can learn anything from him about the environment. That has been shown very clearly in this place over the last 18 months.

Senator Puplick —You certainly have a lot to learn about the Antarctic. You had to drag Richardson and Evans screaming in here.

Senator MAGUIRE —Senator Puplick can eat his heart out. He certainly does not have any expertise in economic matters. He is certainly not qualified to talk about any matters relating to the state of the Australian economy. It is a pity that Senator Stone has left the chamber because I have before me an article from the Adelaide Advertiser of 12 September 1988 with the headline, `Stone Slams Proposed Cuts in Personal Tax'-that is, Senator John Stone, the former head of the Treasury under the Fraser-Howard Government. He is saying that we should not have personal income tax cuts from 1 July this year. The article said:

Senator Stone, a former Treasury head, yesterday said, ``It would be irresponsible for big tax cuts to be given on July 1 next year as planned''.

I have just shown that we are not giving these tax cuts as an end in themselves. They are a very important economic mechanism.

Opposition senators interjecting-

Senator MAGUIRE —Opposition senators are showing their cynicism yet again. They are all getting very excited about the tax cuts. They know that they are very large tax cuts. They know the Institute of Family Studies recently endorsed the tax cuts and said it would provide major relief to Australian families and major increases in disposable income. I am making the point that there is a very good reason for these tax cuts, that they are not an end in themselves.

Senator Lewis —Too right. You want to get yourselves re-elected.

Senator MAGUIRE —We are faced with the cynicism of the Opposition again.

Senator Cook —You are opposed to them, are you?

Senator MAGUIRE —Senator Stone is opposed to them. I will be referring to this this afternoon. I will ask Senator Stone what his attitude to these tax cuts is. The reason we have brought these tax cuts in is very much in line with the terms of the urgency motion which will be moved in this place by Senator Stone this afternoon about increasing Australia's international competitiveness. That is what it is all about. It is about giving Australian families higher disposable income, higher after-tax income, without creating huge wage burdens for employers. We are keeping down the growth of wage costs in Australia to a figure of about 6 1/2 per cent next year by giving significant personal income tax cuts from 1 July.

I have made the point. It is most unfortunate that Senator Stone was not here to say what his position is on these personal income tax cuts. Labor's central priority has been to get the economic conditions right in Australia, but not at the expense of the poor or the disadvantaged in our nation. Economic and social policies have worked hand in hand and it is through economic growth that Labor has created jobs, improved social welfare and helped the needy in the Australian community.

The ACTING DEPUTY PRESIDENT (Senator Bjelke-Petersen) —Order! The honourable senator's time has expired.