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Wednesday, 30 August 1989
Page: 615

Senator SCHACHT(4.20) —I must say that Senator Stone has put up quite an amazing proposition. I have often said that one must, in this place, debate policies. But as Senator Stone has put forward this proposition, one cannot help but look at his track record over a number of years, both in the Department of the Treasury and as the Leader of the National Party of Australia in the Senate. I know that Senator Stone would hem and haw and cry and moan, because he knows as well as anybody, if he is honest with himself, that his track record is not too hot. To say the least, it could be called very disappointing.

As I understand it, Senator Stone was a longstanding member of the Australian Treasury. An officer at a pretty senior level, he had a reputation of being one of the movers, the makers and the breakers, the thinkers and so on of that department over many years. As I understand it, he was a senior officer at the time of the 1961 recession which, of course, put a couple of hundred thousand Australians out of work. As I understand it, he was a senior officer of Treasury which rejected the first attempt ever made to deal with the structure of Australian industry-the Vernon Committee of Economic Inquiry which was commissioned not by a Labor government but by the then conservative Government led by Sir Robert Menzies. But Treasury was opposed to the report of that committee. That report hit the fence. As a result, Australia was left with all the structural problems in the 1950s and 1960s associated with our inefficient industries that we are still trying to get out of today. This Government is making a much better attempt, despite its difficulties, than anything that Senator Stone was able to do in his negative period in Treasury.

Then, as I understand it, he was posted off to the International Monetary Fund (IMF) during the 1960s. I do not know how many Third World economies the IMF helped collapse or how much deprivation was created by the severe shock of the economic policies it imposed on Third World countries during that period. Senator Stone returned to Treasury and became its head. His most singular achievement was being in the Treasury at the time of the 1982-83 recession when unemployment in one year alone increased by over 250,000 people.

Senator Stone —Unemployment produced by your mates in the Metal Workers Union.

Senator SCHACHT —Senator Stone was the head of Treasury--

Senator Stone —Ask John Halfpenny, Laurie Carmichael-your mates.

Senator SCHACHT —He was the head of Treasury. I never heard him make those comments at the time, other than possibly over an occasional drink at the National Press Club with some of his mates.

Senator Bolkus —His mates?

Senator SCHACHT —With some of his mates. I enjoyed having a drink, even on those occasions, with Senator Stone because his arguments were so extreme they were so easy to debate.

Let me refer to the final part of Senator Stone's Treasury track record which is really incongruous in terms of what he is now saying. When the Federal Cabinet in 1983 proposed the deregulation of money exchange controls and floating the dollar, guess who led the charge to say, `No, we shouldn't do this'. It was one J. Stone, head of Treasury. That was his position. Shortly after that, I suppose much to the relief of most of us, he did maybe the honourable thing-he resigned from Treasury and headed off into private enterprise. He did this after a record distinguished by nearly 30 years of economic pessimism, of putting people out of work.

Then, two or three years later, to our extraordinary surprise, he joined the geriatric campaign to make Joh Bjelke-Petersen Prime Minister of Australia. He became the economic adviser to Joh Bjelke-Petersen.

Senator Stone —That is quite untrue.

Senator SCHACHT —Well, I must say that it was a front page story all over Australia. Senator Stone was quite an asset for the Bjelke-Petersen drive for prime ministership. Senator Stone was going to advise him economically.

Senator Bolkus —But Joh was going to advise him politically.

Senator SCHACHT —As Senator Bolkus says, Joh was to give him political advice. I will return in a moment to Senator Stone's role with the National Party in Queensland.

Opposition speakers have quoted at some length from the Moody's Investors Service Inc. report. They have claimed with some great delight that the report proves and justifies all their comments about the Government's economic performance. But I notice that none of them today mentioned a number of comments made in an interview on AM this morning following the publication of the report. David Henderson, who was interviewed, is head of the Department of Economics and Statistics in the Organisation for Economic Cooperation and Development (OECD), Paris.

Senator Stone —Is he an Australian?

Senator SCHACHT —He was in Australia.

Senator Stone —Is he an Australian?

Senator SCHACHT —I have no idea. I think, from his accent, he is an Englishman. I am interested that Senator Stone is now attacking the OECD on the basis of xenophobic nationalism, that unless people are Australian they are no good in the OECD. I am sure that his former colleagues in Treasury who work with the OECD would be most bemused by his comment that unless one is Australian in the OECD one does not stand for anything.

Senator Stone —I have not made those comments.

Senator SCHACHT —Well, the honourable senator asked whether he was an Australian. By implication, he wanted to know his nationality.

Senator Stone —I asked whether he was a man who would be concerned about Australia.

Senator SCHACHT —He is here in Australia at the moment. If the honourable senator wants to attack the OECD, that will have extraordinary implications as far as the Opposition is concerned. The OECD prepares regular reports and I suspect that when Senator Stone was head of Treasury, he helped prepare advice to the OECD in the preparation of those reports. I trust that when he was dealing with Frenchmen, Englishmen, West Germans or whatever, he did not say, `We're not going to listen to you because you are not an Australian; you do not have the right accent'.

Mr Henderson made some very interesting comments during the interview on AM. He was asked by the reporter:

First of all, increasing debt levels, are they a worry, should Australia be concerned?

Mr Henderson replied:

I don't think the situation has changed very much, recently. I don't think it's a matter for great concern, no.

The reporter then said:

So a debt which . . .

Mr Henderson replied:

I think the current level of the current account deficit is higher, I think than can be sustained and higher than the Government would wish to see sustained.

The reporter then asked:

And the consequences of that?

David Henderson said:

The consequences are not necessarily very serious.

The reporter said:

Well of course, it's being argued in Australia that a high current account deficit, if it continues, must mean a declining standard of living.

Mr Henderson answered:

No, not true. I don't think the Australian situation is very different in this from the British situation.

Some comment was then made about the British situation. The reporter asked a further question:

Well, what are the key issues then, the Government must focus on in Australia, whichever political persuasion that Government is, to keep living standards high.

Mr Henderson said:

I think the key issues are not the short term issues, which are being so much discussed right at the moment, particularly after the change in the Moody's rating. The key issues concern the direction which economic policy has been taking in Australia in recent years and there I think, there's reason for Australian people to think that things have been going rather well . . .

The reporter asked:

In what respect? What are the things . . .

Mr Henderson answered:

. . . as indeed they have in my own country. So some parallel, even though you've got very different Governments in power.

The reporter then asked:

Well, where should the Government then be given praise for what it's done?

Mr Henderson said:

I think the Government should be given quite a lot of praise, though it's not alone in the OECD, for what it's done in respect to public finance. It's reined in public expenditure at the Commonwealth level; it's changed around the Government fiscal balance to now a surplus in the public sector borrowing requirement; it's done a lot to liberalise financial markets, as you know-that's been a very drastic program which I think is already probably paying off in better performance. Almost alone, not quite alone-Japan, note Japan, and New Zealand are with them, but there are very few OECD countries that have actually undertaken trade liberalisation in the 1980s on balance, Australia is one. They've done less probably in the way of labour market reform but I think probably that will be increasingly on the agenda.

Before the members of the Opposition get all enthusiastic about labour reform, I want to refer further in the interview to his comment about the question of labour reform. The reporter asked:

Does the OECD support the move towards more collective bargaining?

Mr Henderson answered:

I don't think we have a view on that. How do you mean more collective bargaining, excuse my question?

The reporter then said:

A movement away from the centralised system of wage fixation, which we have in Australia.

Mr Henderson replied:

The OECD has not taken a position on that and in his private capacity-because I asked him-the OECD colleague of mine who knows most about that, says that his personal view is that this, in the circumstances of the Australian economy, this still serves a very useful purpose.

That is, the centralised system of wages. The person in the OECD who is in charge of making reports on wage structures says that the collective system of wages still serves a very useful purpose in this country. On all the counts which Senator Stone and Senator Messner have raised in this debate, we have heard from a senior figure in the OECD-who I have never heard of, I must admit, until today on the AM program--

Senator Messner —Neither have we.

Senator SCHACHT —Senator Messner admits he has not heard of him, but he clearly cannot deny the fact that the head of the Department of Economics and Statistics of the OECD is not someone of inconsequence. We have enough evidence to show that the pessimistic attitude of the Opposition towards the Government's economic performance can be dismissed.

I want to mention quickly the fact that the Opposition has given no credit to this Government for a major structural change within the Government's fiscal policies and the impact of the Budget surpluses we now have. This year it is estimated that we will have a Budget surplus of about $9 billion. That means that in the three years to 30 June this year there will be a total surplus of $17 billion. It is said in the Budget Papers that all up the total Commonwealth debt-overwhelmingly domestic debt-totals $41 billion. That means that if that surplus is averaged out at about $6 billion over the three years to 30 June, at that rate we will be able to pay off the total Commonwealth debt. That would mean a significant structural change to the Budget in that the $7 billion now listed in the Budget for interest payments would no longer be required and, therefore, there would be money available on the outlays side to be given either as tax cuts or in some other area to which the Government may choose to give spending priority. That is a major structural change for which this Government should be given great credit.

Senator Messner —No wonder you are in such trouble if that is all you can think about.

Senator SCHACHT —That compares with the 30 years from 1949 when Senator Messner's Government had a deficit in some form or other in the Federal Budget.

Finally, I return to the points made by Senator Stone. If he is so keen about Moody's Investors Service Inc. giving a credit rating for Australia, I suggest that, as a National Party senator from Queensland-the leader of the biggest number of National Party senators from any State-he invite Moody's to inspect the way in which Queensland manages its business. Why does he not ask Moody's to go to Queensland and have a look at the report on the Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct? What sort of credit rating would the National Party Government in Queensland get after the findings of the Fitzgerald report on the rorting, corruption and tendering system of the National Party Government, a party of which Senator Stone is a member? That is a question, the answer to which we will not hear from Senator Stone-not one squeak. We should remember that he is only in this place because Joh Bjelke-Petersen put him here. Now we find he is running for the House of Representatives seat of Fairfax. Who got him the preselection for Fairfax? It was Sir Robert Sparkes, the head kicking, arm twisting thug of the Queensland National Party. I understand he only got up by one or two votes against the former member for that area, Mr Slipper.

Before Senator Stone starts criticising this Government's economic policies he ought to have a good look at the people he represents and is associated with in Queensland and their performance. The National Party in Queensland is the most corrupt in the history of Australia. There is no doubt about that; it is on the record. He is a member of the party in government that has set that record. If Moody's had a look at the Queensland Government its credit rating would be -ZZZ, as it deserves to be. Therefore, the matter for discussion as presented by Senator Stone can be rejected as a cynical piece of lightweight politics. We know that Senator Stone probably will not even win the seat of Fairfax. Senator Parer's party may have the opportunity to take that seat off him at the next election.