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Wednesday, 30 August 1989
Page: 590

Senator LEWIS —My question is directed to the Minister for Industry, Technology and Commerce. I ask: Is it reasonable to expect that a country which is a major commodity exporter like Australia would benefit from high commodity prices, and that this would be reflected in an improvement in the current account and foreign debt position? How does the Minister explain that, given the further major improvement last financial year in Australia's trading conditions, there has been a blow-out in the current account deficit and a 20 per cent increase in net external debt over the 1988-89 financial year? Will the Minister confirm that, as a percentage of gross domestic product, Australia will this calendar year have the worst current account deficit of any Western industrialised nation?

Senator BUTTON —Of course, a country which is commodity dependent in terms of its exports, as Australia is, is likely to benefit from high commodity prices. All the first part of Senator Lewis's question is designed to point out is that the terms of trade have been favourable for Australia in the last couple of years, something which they were not a couple of years before that, and indeed there may be some marginal signs of movement in respect of particular commodities which affect the terms of trade. So one would normally expect that a commodity dependent economy would be pleased by high commodity prices.

He then goes on to attempt to tie a number of other issues to that question. One of the reasons, of course, for the terms of trade imbalance in the past year or two has been the very high level of growth in the Australian economy, the consequent very high demand for imports, and the fact that imports in some areas have been at record levels. In some cases they have been encouraged by high consumer demand; in some cases encouraged by very high, record levels of investment in certain sectors of the economy.

It is, in those circumstances, not entirely surprising that the current account deficits have been continuing at the levels that they have in the last couple of years. Of course, a current account deficit is not a new phenomenon in this country. Only twice in the last 14 years, I think, has the value of exports from Australia exceeded the value of imports. It is not a new problem; it is just a problem which has been exacerbated by high levels of demand, last year particularly, and by increasing levels of imports associated particularly with increasing levels of investment. Of course, the art form, as I certainly would argue it, is to carry out over time the necessary structural adjustments in the Australian economy which will help it diversify.

Senator Walters —Why have you not done it?

Senator BUTTON —We have made tremendous progress, as was acknowledged this morning, Senator Walters, by the Director of the Organisation for Economic Cooperation and Development Economic Analysis Group.

Senator Boswell —Why do you not play by the umpire's rules?

Senator BUTTON —Mr President, every time I try to answer a serious question Senator Boswell produces something out of a brown paper bag and brandishes it at me. I am surprised at you, Senator. As I was saying, the process of structural adjustment in this country has been enormous; it has been recognised as such. It is continuing, and will continue, under this Government; and during that period of structural adjustment we are liable to encounter these difficulties. Everybody who knows anything about the Australian economy recognises that.

Senator LEWIS —Mr President, I wish to ask a supplementary question. Can the Minister point to any programs in the Budget brought down the week before last which might overcome these problems?

Senator BUTTON —It is a bit hard on me to ask me to point to particular programs, Senator. Let me answer the question by referring to the strategy of the Budget.

Senator Stone —What strategy?

Senator BUTTON —The strategy of the Budget.

Senator Stone —The strategy of conning the Australian people once again.

Senator BUTTON —Senator Stone talks about conning the Australian people. He would know all about that; he told us we were going to have a recession in 1988. He tried to con the Australian people into a recession in 1988.

Senator Lewis —Just answer the question.

Senator BUTTON —Senator, these people from the National Party in Queensland-for goodness sake-coming in here and interjecting! Queensland has the most un-restructured economy in Australia. Look at all Queensland's marketing boards-cluttered with them, putting your mates on them. Look at all that stuff in Queensland. Those opposite know all about that. The National Party in Queensland is a disgrace, Mr President.

Opposition senators interjecting-

Senator BUTTON —I am sorry they should see fit to interject in a serious chamber like the Senate.

Senator Lewis —Just answer the question.

Senator BUTTON —In answer to Senator Lewis's question: Look at the Budget; look at all the major indicators in the Budget; look at the fact that this country now has the largest fiscal surplus it has ever had. A whole range of indicators in the Budget show the strategy of this Government, which has been accepted by the Australian people, which has been accepted, by and large, by economists, and which is not accepted only by this miserable collection of grandstanders we have in the Opposition in the Senate, who will clutch on to an airline pilots strike, clutch on to anything, in order to get their names in the paper and let people see them as being marginally visible.