Senator WATSON —On a similar theme, I direct my question to the Assistant Treasurer. Minister, I refer to the outcomes following the recent Premiers Conference Loan Council meetings. Could you please explain whether you considered the outcomes were satisfactory. Could you also explain who should shoulder the blame for the reduction in the states' and territories' general assistance grants?

Senator SHORT —I thank Senator Watson for that question because it follows on very naturally and well from Senator Wheelwright's question to me. Let me start with the part about who should shoulder the blame.

Senator Robert Ray —Every time the pressure's on you fold. Why did you fold, Jim? You gave in to the premiers.

Senator SHORT —The blame for the need for the deficit reduction strategy that this government has put in train with great courage and great integrity lies wholly and solely with the previous Labor government and, very importantly, with the previous Minister for Finance who is now the Leader of the Opposition in this country, Mr Beazley.

Senator Bob Collins —What happened to the courage last week, Jim?

Senator Faulkner —Jim, have a look behind you.

Senator SHORT —It was during Mr Beazley's reign as finance minister of this country that the finances of the federal government slipped to such an extent that—

The PRESIDENT —Order! I cannot hear what is being said in answer. There are too many interjections on my left and they will have to cease if we are going to go on with question time.

Senator SHORT —The finances slipped to such an extent that this government inherited an $8 billion deficit which, contrary to what you opposite may believe, actually does have the effect of increasing interest rates, actually does have the effect of increasing unemployment, actually does have the effect of reducing job creation and actually does have the effect of reducing economic growth and reducing the living standards of all Australians. This government was elected to repair that damage that 13 years of Labor mismanagement and fiscal vandalism had caused.

Unlike you Labor Party members opposite, the welcome fact is that the state and territory leaders accepted that need. They were prepared to accept and shoulder their responsibilities in the interests of all Australians. What is absolutely disgraceful is that the Labor Party opposition in this chamber, which caused the problem through the erosion of integrity in government financing, is not prepared to accept and share in the need for the restoration of fiscal responsibility and the integrity of the finances of this country.

The outcome of the conference was very satisfactory indeed, because the result is that the states are going to contribute approximately $1.5 billion to fix up the budget bottom line over the next two to three years. They have accepted that in a spirit of compromise and cooperation which does them great credit, and discredits those opposite. They acted with a high degree of responsibility, and the Commonwealth accepts and welcomes that.

Let me say again that Labor created the problem. The government that was elected on 2 March was elected to fix the problem. It is fixing it. I am delighted that it is doing it with the full cooperation of the states and territories.