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Wednesday, 26 May 1993
Page: 1317

Senator SHORT —My question is directed to the Minister representing the Prime Minister. The Auditor-General's report tabled in the Senate yesterday revealed financial obligations in excess of $125 billion by the Federal Government, further potential obligations of $44 billion and liquid assets of only $57 billion to meet the bill. Does the Minister agree with the Auditor-General that this massive financial burden can only be met through increased taxes, privatisation or reduced expenditure?

Senator GARETH EVANS —It needs to be appreciated that the Auditor-General's report acknowledges that the Commonwealth's financial position is fundamentally sound. Whatever improvements in accounting systems and so on that might be appropriate and were recommended in the report, there is absolutely nothing in the language of that report which would remotely justify the kind of bizarre and over-the-top reaction we have seen from the Opposition, and particularly from Mr Costello in his extraordinary reference to child abuse. If that is the quality of informed and mature comment we can expect from the new Opposition in relation to these matters, God help this country in the future.

  The report focuses on the outstanding obligations of the Commonwealth, but what it ignores, in all but passing, is the Government's significant asset base and, more importantly, the Commonwealth Government's capacity to fund these obligations over time through its existing revenue base.  The report notes that the face value of its debt at June 1992 was 11.8 per cent of GDP. This compares favourably with the prior 10-year average of 13.2 per cent. It is also worth making the point that the Commonwealth is extremely well placed with respect to its financial obligations when compared with other OECD governments. OECD statistics show that Australia's net general government debt in 1992 represented only 16 per cent of GDP, and that is less than half that of the average for the G7 countries and below that of all the major OECD countries except Japan.

  It should also be recognised that these obligations will not be required to be paid at any one particular point in time; rather, they will become due over a very long period and, in the case of superannuation, in excess of 50 years. Several of the recommendations, moreover, that are made in the report are absolutely in line with policy initiatives that have already been taken by the Government. In particular, the Government's decision in November 1992 that departments move to financial reporting on an accrual basis will provide the basis for comprehensive information to be reported to the Parliament and the public on the financial position of the Government.

  Opposition senators interjecting

Senator GARETH EVANS —I think it should be acknowledged by those opposite who are chortling and crowing that this initiative is a significant addition to the range of planning, reporting and accountability mechanisms which are already in place which ensure that appropriate levels of control over the Commonwealth's financial obligations are maintained and which do allow disclosure.

Senator SHORT —Mr President, I ask a supplementary question. I must say that I am absolutely amazed that the Minister has quite obviously not read the Auditor-General's report, which expresses much greater concern than he is trying to delude the House into believing. He has obviously deluded himself. Is the Minister aware that the Auditor-General has expressed the major concern that the prospect of further increases in the Government's financial obligations will lead to increased foreign debt and, therefore, a further loss of our independence and our national sovereignty?

Senator GARETH EVANS —There is absolutely no reason to cast the issue in those terms. If that language was used in the report—and I cannot believe that it was in as stark and crude terms as that from people who are reasonably sophisticated in their approach to these matters—that is simply a misconstruction of the reality. I draw Senator Short's attention, moreover, to the reaction in relation to the report of the Deputy Auditor-General, Mr Jacobs, on ABC radio program AM this morning, when he said that the Government was perfectly able to meet its debts from its assets and from its taxation revenue. I think that puts the matter in thorough context.