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Thursday, 22 May 1980
Page: 3138

Mr John Brown (PARRAMATTA, NEW SOUTH WALES) - The credibility of this Government, and of the Prime Minister (Mr Malcolm Fraser) who leads it, has been torn to shreds over the past four years for many reasons. But nothing has done more to discredit the Prime Minister and his Government than their record in the management of the Australian economy. Nearly 18 months ago, in another adjournment debate in this House, I dealt with a particular aspect of this failure on the part of the Fraser Government- its disastrous and unprecedented program of foreign borrowing. I want to deal with that topic again tonight, because it has become even more important, yet more grossly mismanaged since that last occasion in October 1978.

The name Khemlani used to make the leading members of this Government bay to the moon like blood-crazed wolves. Yet, since this Government came to office, it has been responsible for foreign borrowings around $4,500m which is far beyond the figure attributed to Mr Khemlani 's fund-raising program. Two things have happened in these past 1 8 months to worsen the situation. Firstly, this Government has continued to borrow like an international spendthrift and, secondly, the gnomes of Canberra who administer the borrowing system have added enormously to its cost by their mismanagement. Since that mismanagement stems from directions issued by the Government there can be no question about where the responsibility lies.

This Government's borrowing of around $4,500m means that it has placed every man, woman and child in Australia in hock to foreign finance houses to the extent of almost $400. If we look at the debt in terms of the average Australian household, it comes to around $1,270. In my case, because I have been a fairly prolific breeder, it is even more. Let me place those debt levels in contrast with those in 1974-75. At that time the average level of indebtedness was not $400 but about $88 for each person in the country. For the average Australian household, the figure was not $ 1,270 but a mere $296. What has happened since then has been entirely the responsibility of the present Prime Minister and Government.

In November 1976, after the Government had devalued the Australian dollar by a huge \lVi per cent, the Prime Minister had this to say in justification of the action:

Is there anyone here who would say they would sooner put Australia into hock to the tune of $ 1,000m than devalue . . .

As we now know the Government has borrowed continuously despite that big devaluation. Australia is now in debt to the tune of $5,700m. At the end of April, our reserves stood at $5,043m. That simply means that we are running on overdraft. So much for the Prime Minister's homilies on the virtues of good housekeeping and balancing the family budget! The Government is drawing Australia to the brink of international bankruptcy. Even worse, the gnomes of Canberra have put us much further into hock by the way in which they have selected currencies for these overseas loans. If a company treasurer in the corporate world had managed his affairs in the way that these matters have been managed he would have been sacked. However, over the, past four years, currency fluctuations have added $ 1,000m to our international indebtedness on top of the actual borrowings. According to calculations published recently in the Australian Financial Review by Dominguez and Barry that figure is made up of about $740m in the three years to 1978-79 and about $380m in 1979-80. Like the Government the gnomes of Canberra receive regular up-to-date advice from Australia's representatives posted at the international monetary- -

Mr Neil - Mr Speaker,I take a point of order.

Mr SPEAKER -Order! The honourable member for Parramatta will resume his seat.

Mr Neil -I understand the word 'gnomes' to connote a person who manipulates against the national interest. This phrase has been used against public servants who are dedicated people. They cannot defend themselves publicly. I submit that the honourable member should have given notice that he wanted to say this.

Mr SPEAKER -There is no substance in the point of order.

Mr John Brown (PARRAMATTA, NEW SOUTH WALES) -Like the Government, the gnomes of Canberra receive regular uptodate advice from Australian representatives who are posted to the International Monetary Fund in Washington and the Organisation for Economic Co-operation and Development in Paris on the relative strength of different currencies. Why was this advice not heeded? This Government claims as one of its special virtues an expertise in economic management. Yet here was a case where the Government received expert uptodate advice on the international financial situation but took decisions which increased the indebtedness of every Australian household by $250 over and above the initial face value of the loans. At this stage I seek leave to incorporate in Hansard two tables which illustrate Australia's overseas reserves and debts and the change in overseas debt obligations resulting from movements in exchange rates.

Leave granted.

The tables read as follows-



Mr John Brown (PARRAMATTA, NEW SOUTH WALES) -I thank the House. The Treasurer (Mr Howard) repeatedly stressed how favourable were the terms of these loans as he announced them one after the other. His claim was based entirely on the fact that the interest rate on the foreign loans was below the going interest rate in Australia. This approach was entirely unrealistic.

Mr SPEAKER -Order! The honourable gentleman's time has expired.

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