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Wednesday, 20 August 1969

Senator COTTON (New South Wales) - Always on the occasion of the presentation of a Budget, just as on this occasion, there is a great rash of experts before the Budget predicting what will happen, and after the Budget in some cases illuminating the scene but very often making it darker. Tonight I have listened with some fascination and, if I may say so, quite considerable confusion to Senator Murphy, and with great interest to Senator Gair who gave us rather equal doses of praise and blame. Senator Murphy's contribution interested me because, in the spirit expressed by Senator Mulvihill, I would hope that if we detected a useful proposition, a situation of new economic merit, we would be sensible enough to encompass it. I hope we would say to ourselves: This is an idea that has something in it and we ought to try to do something about it. We should think about it and use it, or at any rate be openminded.' I do not have a copy of Senator Murphy's speech so I cannot read it. I cannot get it until tomorrow.

Senator Keeffe - But you can remember it.

Senator COTTON - Not really, not in the state of confusion engendered in me.

Great plans are being made against inflation. 1 think honourable senators will agree that I am always concerned about the possibility of inflation.

Senator Keeffe - There is a state of inflation now.

Senator COTTON - 1 think that there always will be in the kind of society that the honourable senator has preached and stood for all his life. If he docs not mind, I want to develop the dichotomy in the thinking of Senator Murphy and the Australian Labor Party. So we want a society - I certainly do - of maximum growth and full employment. Is Senator Murphy against a society of maximum growth? Is Senator Murphy against a society of' full employment? How would he achieve those two things in a state of economic reality without some inflation in the system? On the other hand, we heard from Senator Murphy a magnificent story of running the economy with balance of payments deficits. 'This has to be stopped', said Senator Murphy. So in the process of stopping this we heard from Senator Murphy a substantial deflationary proposal. This would mean that we would have substantial unemployment. That is his proposal. It will be understood by all honourable senators, therefore, that I am in a state of some confusion about the economic intent of the Australian Labor Party as a potential government of the people of Australia.

Turning to the earlier point, as one would hope and expect there are many people who are expert in the field of budgeting, both before and after the event. But the fascinating exercise was that before the Budget we had predictions by all kinds of experts of two events - (a) a very inflationary scene, and (b) a very deflationary scene. After the Budget was presented we heard this statement: 'This is a highly inflationary Budget. This is a dreadful performance. It is shocking, disgraceful and should not be permitted. Give the job to me and I will do it much better.' On the other hand we heard it said: 'This is a deflationary Budget. This is a bad thing. Why should people do these things?'

Because I hope that in this place we try to take an intelligent and a long term interest in the nation's welfare - an interest which is based upon practical considerations and realities - I suggest that this is neither an inflationary nor a deflationary Budget. After many years we have a balanced Budget. That is a term that most people have forgotten. Long ago it was customary to balance a Budget. The adoption of some of the proposals we have heard tonight would put this country back again into a very substantial deficit and into a heavily increased field of income tax. There are people - I sympathise with this view because, after all, I am a person who from time to time stands in need of some help - who want many additional things for the Australian people. That is good and proper. But they do not want to pay for those things either in a deficit Budget, in increased taxation or in contributions from overseas capital. They want these things but they do not want to consider how they are to be earned.

Senator Keeffe - What about getting back to the Budget?

Senator COTTON - I will be happy to do that both tonight and tomorrow. I am concerned about proposals for (a) increased taxation in reality and (b) increased deficits. I do not think it would be amiss for me to make the comment that the Budget is a major instrument of economic policy. In discussion and debate on the Budget it is proper to deal with the subject matter. The subject matter of budgeting is economic policy - what we intend to do in relation to economic policy, where that will lead us, what happened in the past, what should happen in the future. We do not want the exercise of personal extravaganza on some pet hobby that one might have that one is not prepared to pay for either in principle or in any kind of revenue system. Deficit budgeting has been the pattern in Australia for quite a long time.

Senator Keeffe - Ever since Menzies won the government.

Senator COTTON - Further back than that. In the circumstances which prevailed then deficit budgeting had my full support. Please accept this: I believe it was both wise and sensible in that phase of our growth to have a situation of quite substantial deficit budgeting. But in past years when the benefits of deficit budgeting were being generated and people in this chamber and in other places in the community were sharing in those benefits, I do not recall any complaints about it. 1 do not recall the voices we now hear saying then: 'We should not do this'. We did not hear that. We accepted it as a necessary fact of life and a wise way in which to behave. For my part I have felt lately that the time is approaching - in fact T believe it is here - when deficit budgeting as such should cease, at least temporarily, and that we should pass as close as we can to a situation of balance. I believe this because I now think that we are in a state of equilibrium.

Senator Keeffe - Do not say that, lt will be the end of the Treasurer.

Senator COTTON - I doubt it. I think we are fairly evenly poised between resources, on the one hand, and demand on the other hand. If you look back to past years you will find that one reason for deficit budgeting was the necessity to pick up areas of unused opportunity.

Senator Keeffe - One of my colleagues has just said that you have done your portfolio.

Senator COTTON - I am glad that you are interested in my welfare. Those particular phases of deficit budgeting were important. The first substantial one took place when the government of this country decided that it was justified in deficit budgeting to increase government expenditure with a view to generating confidence in the private sector. That phase passed. If you recall budgets of a few years ago you will remember the strong attempts that were made to generate growth and that first exercise to get the private sector developing more strongly. That condition has been achieved in the last 2 or 3 years and I now believe that we are in a situation in which equilibrium is about as close as it has ever been in the sense of economic achievement.

Senator Georges - What about primary industry?

Senator COTTON - You do not understand this so why not keep quiet and try to learn. There are some useful documents in the Budget Papers. It is not possible tonight to deal with them all but in the statement of national accounting expenditure there is a general reference to public authority spending. If you look at this you will see the increasing expenditure by governments of all kinds in Australia and the pressure that this puts on us all and on the system. If honourable senators opposite are interested in this subject I ask them to listen to me. If they do not, then they can continue their private conversations about something quite unconnected with the realities of our economic life. We find the general pattern of Budget deficits in the past reproduced in table 1 on page 48 of the Budget Papers. There has been a consistent pattern of deficits since 1959-60 and only in 1960-61, 10 years ago, did we have a situation approaching the present one. In that year we budgeted for a deficit of $32m.

Senator Keeffe - That means another Budget next year if you win the election.

Senator COTTON - The difficulties in hying to talk to the Australian people through the membership of this august chamber, having regard to the state of confusion which exists on the other side, are obvious. Surely it demonstrates to us all the complete incapacity of the Labor Party to engage in any sense at all in the economic management of a country of this size and importance. In fact very few honourable senators opposite are qualified to be shire councillors in a particularly poor shire. Those honourable senators opposite who have bothered to read the Budget Papers - T can recommend that as an exercise for those who intend to participate in the Budget debate - will note that a deficit of $30m is proposed this year. My guess is that the deficit finally will be much less than that. The Treasurer (Mr McMahon) is a very conservative man in his predictions. The Treasury is usually conservative. Therefore I expect a situation very close to balance or surplus in June next year.

Debate interrupted.

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