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Thursday, 1 June 1989
Page: 3223

Senator PARER —My question is directed to the Leader of the Government in the Senate. I refer the Minister to the foreign debt figures for the March quarter, which show that gross foreign debt rose by almost $7 billion over the quarter to $128.6 billion while net foreign debt rose by more than $7 billion to $103.2 billion, breaking the $100 billion barrier for the first time. Given the continuing chronic deficit on the current account, which now looks like reaching $17 billion for the year and more than 5 per cent of gross domestic product (GDP), does the Minister agree that Australia's debt level and debt servicing burden will go on increasing? Does the Minister consider that the current account deficit, the level of debt and its rate of increase are sustainable? If not, would the Minister advise the Senate and the people of Australia what this Government, which is responsible for this mismanagement, intends to do about it?

Senator BUTTON —There are a number of questions there. I will try to do justice to some of them in my answer. If the foreign debt is stated in money terms, as I have said before in this place, it is a cause of concern. However, the ratio of net foreign debt to GDP is down to 31.7 per cent from 32.4 per cent 12 months ago. That does not mean that that is any source of great comfort, but it has to be compared with the somewhat flamboyant question which I was asked by Senator Parer.

Senator Lewis —It was not flamboyant at all; it was a genuine, simple and good question.

Senator BUTTON —Senator Parer has got full marks from the Acting Leader of the Opposition. He says that it was a good question. It is important to note the composition of Australia's foreign debt. Attention has been drawn to that in recent times by several Government and non-Government spokesmen. That has been done to counteract the somewhat nonsensical view put by some Opposition spokesmen that this debt is owned by every Australian family and so on. It is not owed by every Australian family, or by the Federal Government.

Senator Boswell —Who is going to pay it back? Aren't we the borrowers? Aren't we, the Government, borrowers?

Senator BUTTON —You should know! When I was asked a question by Senator Jones earlier in Question Time, Senator Boswell interjected and said that it was a trivial question when this country is faced with a great crisis. Senator Boswell now indicates that he does not understand the parameters or the extent of the great crisis to which he was referring earlier in Question Time. I am just making the point that it is nonsensical for people to go round saying that this is a debt owed by the Government or on behalf of Australian families. It is essentially corporate debt and debt by State authorities. In so far as the debt level does require Government action, the Government believes that it has in place policies that will deal with these issues-not tomorrow, not next week. Even three or four years ago, when discussing this question of national debt, Government spokesmen were saying that they did not expect our national debt to stabilise until the early 1990s. That is a consistent position.

Senator Lewis —Do you think we can wait until the debt has stabilised? The dollar is going down day by day. You have no options.

Senator BUTTON —Senator Lewis says there are no options. One can wait for the debt to stabilise and to be reversed. In so far as the Government had debt, that has been done. Alternatively, one can follow the sort of knee-jerk responses that those opposite would introduce, based on their interjections at Question Time, which would only exacerbate the situation in both the short and the long term.

Senator PARER —Mr President, I ask a supplementary question. The Minister referred in his reply to comments on our side as being nonsensical. I think the Prime Minister referred to comments about our concern about the debt crisis as being scaremongering. Yet he himself said that it was an external problem that we needed to address. That was the basis of my question. If it is not the problem that the Minister says it is, what is the external problem to which the Prime Minister refers, and how does the Government intend to address it?

Senator BUTTON —Senator Parer asks an important question and does not listen to the answer. I did not say that it was not a problem. I said that it was a matter of great concern.