Senator FAULKNER —My question is directed to Senator Short in his capacity as Minister representing the Treasurer and the Minister for Finance. I ask Senator Short: did the Prime Minister, Mr Howard, claim in the press over the weekend that, if the Senate failed to pass the entire budget, this would have a detrimental effect on the level of interest rates? I ask Senator Short whether this the same Mr Howard who, on ABC radio in June last year—I quote him directly—said:

The two things that the markets react to and look at constantly in a revolving way are the size of the current account deficit and the strength or otherwise of our currency, and the level of interest rates is far more heavily influenced by those things than a few hundred million dollars either way on the budget deficit.

Was that the same Mr Howard, Senator Short? Was that a core belief or a non-core belief of Mr Howard's?

Senator SHORT —What we are talking about is not a few dollars here and there; we are talking about proposals by Labor that are going to sabotage this budget over the next four years by $18.8 billion. That is even excluding the proceeds of Telstra. If you add them in, you are talking about sabotaging the accounts of this nation by $27 billion over the next four years.

The huge problem you lot made when you were in government—every Australian knows it except you—is that by running huge budget deficits you put up interest rates higher than they would otherwise be, you slow economic growth, you destroy investment, you raise unemployment and you lower the rate of employment growth that would occur.

The reason Gareth Evans says that Labor is suffering from a relevancy deprivation syndrome is that Labor learnt nothing from those lessons when they were in government. During the last five years they ran up a bankcard bill of $70 billion. They left office leaving the Commonwealth government with a debt of $100 billion. The interest rate payment on that debt alone this year is $9.3 billion. It is almost as much as we spend on the defence and education of this nation.

You are quite right, Senator Faulkner: the Prime Minister did say over the weekend that if this budget is sabotaged, as you so wantonly want to do, then interest rates will rise, unemployment will be higher than it would otherwise be, economic growth will be slower and employment will suffer, and so will the continuing structural problems that you left this nation with when you left office.

Senator FAULKNER —Madam President, I ask a supplementary question. Last year Mr Howard said:

The two things that the markets react to and look at constantly in a revolving way are the size of the current account deficit and the strength or otherwise of our currency, and the level of interest rates is far more heavily influenced by those things than a few hundred million dollars either way on the budget deficit.

When Mr Howard said that, Senator Short, was Mr Howard right or was Mr Howard wrong?

Senator SHORT —The larger the deficit in any budget, the lower is the level of savings and the higher, therefore, are the problems in terms of your external accounts, your inflation rate, your unemployment rate and all those structural things that go to make an economy's growth sustainable in the medium and longer term. You obviously do not understand that. You have been going for years now not understanding that. That is the reason the Australian people rejected you so fulsomely in March. That is why they will continue to do so, unless you—

Senator Cook —Madam President, on a point of order: Senator Short finished his answer to the previous question with over a minute to go, he did not answer this part of the question, which is now the supplementary, and he still has not answered this part of the question.

Senator Panizza —What is your point of order?

Senator Cook —My point of order is: in view of that performance, would you, Madam President, direct Senator Short to do the fair thing and stop raving and actually answer the question? Or, if he is incapable of answering the question, would you direct him to sit down?

The PRESIDENT —I believe Senator Short is answering the question. There is no point of order.