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Thursday, 25 August 1983
Page: 315

Mr PEACOCK (Leader of the Opposition)(4.59) —The true measure of this Budget is whether it puts Australia back to work by turning the opportunities of an emerging world economic recovery into sustained economic growth in Australia. By that measure, this Budget clearly fails. It is a human tragedy for nearly 900 ,000 Australians out of work and the many hundreds of thousands more who live in fear of losing their jobs. Not only is the Budget a disaster for the unemployed; it is a disaster for the elderly, it is a disaster for the business community, it is a disaster for families, it is a disaster for interest rates and, by the Government's own admission, it is a disaster for the Australian economy.

The Government has been handed an economy showing signs of an emerging recovery . Thanks to the tax cuts in last year's Budget, thanks to the success of the wages pause, thanks to the ending of the drought, and thanks to the emerging international recovery, it has been given the chance to lay the foundations of a sustainable recovery; but it has blown it. It has gone on a wild spending spree, with the biggest real increases in spending since the irresponsible and devastating Whitlam 1974-75 Budget, leaving the private sector no room to grow. Just under 50 per cent of the nation's income is now passing through the hands of the Government. It has gone wild, on a wild tax grab, taking from Australians the money they need to stimulate consumer spending. It has failed to resist general and sectional pressures from the union movement for economically irresponsible wage increases, further reducing the competitiveness and the profitability of business and further reducing the incentive of business to invest and to create jobs.

To turn the emerging recovery into sustainable growth and renewed job prospects , what is needed is not fiscal recklessness but rather fiscal responsibility, leaving to the private sector the space to grow. What is needed is not increased taxes to finance the Government's own massive spending increases but, rather, money left in the hands of consumers to spend. What is needed is not higher wage costs and taxes on the struggling business sector, but, rather, maintenance of the wage pause and tax relief to enable business profitability and competitiveness to be restored. The Labor Government has consistently stated that central to its strategy is the prices and incomes accord.

Mr Burr —That is shot to bits.

Mr PEACOCK —Well, the Government says that its accord is a risk. There is no risk. It is doomed to failure. Through the accord, the Government claimed that it could engage in expansionary fiscal policy to reduce, simultaneously, unemployment and inflation. We on this side of the House have never believed that this strategy could work, and we have consistently made that plain. Such a strategy will not improve profitability, it will not improve competitiveness, it will not get the private sector going again, and it will not get Australians back to work. But the Government just does not have any understanding of the world as it is, or the needs of the business community.

The Government's Budget Speech and the associated statements, for which the Treasurer (Mr Keating) himself has clearly accepted full responsibility, confirms our worst fears. By the Government's own admission, even if its prices and incomes accord were to hold-and it is clear that it will not hold- unemployment will continue to rise, the underlying inflation rate will remain high, especially by comparison with the rates of our overseas trading partners, interest rates will rise, and business fixed investment will fall sharply.

Let us look at the Government's own words. Budget Paper No. 1, on page 65, states clearly that there will be 'an edging up in the rate of unemployment'. Indeed, it implies that the dole queue in 1983-84 will be on average 26 per cent longer than in 1982-83 and that unemployment will approach 11 per cent or higher . Is that what the Government means by 'edging up' in the unemployment rate? On page 33 of the Budget Speech, the Government states:

'The Consumer Price Index could rise by 7.5 per cent.

That is after the effects of the Medicare scheme are taken into account, which on the Government's figuring will artificially reduce the CPI by 3 per cent. On anyone's arithmetic, that means an underlying rate of inflation of around 10 per cent. This sustained inflation strikes not only at the purchasing power of the pay packet but also at the competitiveness of our industries in world markets. Again, the Government's Budget statements tell the real story on this issue:

At present . . . the Australian economy is not well positioned to improve its share of world trade. In particular, our inflation rate is currently more than twice that of our major trading partners. Prospects for 1983-84 are for no more than some narrowing of that gap.

This is to be found in Budget Paper No. 1 at page 62. So much for preparing the economy to take advantage of the emerging world recovery. Budget Paper No. 1 states categorically at page 70.

The forecasts assume that, in 1983-84 at least, it will be possible to finance the resultant public sector borrowing requirement without significant increases in the general level of interest rates.

In anyone's language that unambiguously means that interest rates will increase, further discouraging investment and recovery. Indeed, Budget Paper No. 1 also states completely unambiguously:

Business fixed investment is projected to fall again in 1983-84 at about the same rate as the very sharp decline of 14 per cent recorded in 1982-83.

In anyone's language that is a devastating indictment of the Government's claim to be able to stimulate private sector recovery. No wonder the Government is obliged to admit that sustained recovery remains a hope for the future rather than a present reality. What hope is there with this Government's strategy? The reality is that there is no hope because this Government does not understand the world as it is. It is lost in its own dreams. The Government tells us that these results, devastating enough in themselves, depend crucially on the accord holding and on 'strictly limited sectional claims'. That aspect of its strategy is already shot to ribbons. Far from limiting sectional claims, powerful unions have already bludgeoned more money from the building industry, the oil industry, the petrochemical industry, and now the food industry. All are outside the national wage case. Some claim to be special cases, others offer no justification whatsoever, but all in reality are part of an organised grab by the powerful unions, and all are establishing norms that the whole union movement will seek to achieve. That point is well made in the editorial in yesterday's Australian Financial Review, which states:

Already there is clear evidence that the union movement has no real intention of sticking to centralised wage fixation which delivers only indexation. The H. J. Heinz settlement reached this week is one indicator of this. Rather the unions are already moving towards using indexation only as a way of generalising wage increases to weak unions while the stronger ones bargain for sectional increases outside indexation.

On the same day, as if determined to prove the Australian Financial Review right , Mr Dolan publicly supported the flow-on-they are his words-of some of the benefits of the building industry allowances deal. That is clearly only the beginning. The accord itself is threatened not only by these pressures but also by the Government's actions.

Last night the Prime Minister (Mr Hawke) said:

The Government is meeting its commitments under the accord . . .

The truth is vastly different, as he knows, though he will not state it. Contrary to its own part in the accord, the Government has not reduced or restructured income taxes to reduce the burden on lower and middle income earners, and that was its part in the accord. The working man on average weekly earnings will be paying 46c tax in every extra dollar he earns by early 1984. Again, contrary to the Government's part in the accord, the Government has raised, not lowered, the relative incidence of indirect taxes. Indeed, it has put up excise taxes on beer, cigarettes, spirits and petrol. With indexation they are on an ever-increasing spiral. How can the Government now seriously expect the unions to stick to their part of the accord when the Government is not dinkum itself and breaks the accord, in regard to both taxes and the matter I mentioned earlier? Already a number of unions, including the Amalgamated Metal Foundry and Shipwrights Union, the Federated Clerks Union and the Australasian Meat Industry Employees Union have said that the heavy increases in indirect taxes have put the accord in doubt. According to a report in the Age today, a spokesman for the meatworkers has said:

I don't think the Government has taken up what is accepted as its responsibilities concerning the Accord.

Then he correctly added, in relation to this Government, that its handling of the accord has brought into question the integrity of politicians who make promises. We all know of the integrity of the person who claims to lead this nation. We know how he claims to wear his integrity on his sleeve day after day, though it is getting muddier and dirtier and dirtier as he conducts the affairs of this nation. What hope does it give the accord when the unions are calling into question the very integrity of the Government, recognising that it has broken its part of the deal? Let the Government's own words describe the further devastating consequences of the looming failure of its wages policy. The Government has said:

A wages outcome higher than currently assumed would have an especially damaging impact on business confidence and private sector spending propensities. The renewal of pressures on corporate profitability, together with a consequent slackening in private demand, would be likely to manifest itself in a further round of labour shedding and another sharp ratcheting up in the rate of unemployment.

Those are not our words; they are the Government's words, to be found in Budget Paper No. 1 at page 70. In the Government's own words we have the clearest possible forecast of what the future holds for Australians as a result of the economic strategy embodied in this Budget-frankly, a future of economic devastation and social despair. Little more could be expected from a government with no understanding of the world as it is.

This most serious prognosis for the Government's economic strategy is a particularly bitter one for a community which is being asked in this Budget to sacrifice so much. If the Government really understood the community it would not hit it at a time when it is so vulnerable. Australians are being asked to make sacrifices, but those sacrifices, according to the Government's own estimates, will be in vain. The Australian Labor Party promised lower taxes. It promised more money in the pay packets of families. Ninety-nine per cent of Australians were to get reduced taxation. In fact, 100 per cent of Australians have got increased taxation. Labor promised that over six million Australians would receive 'immediate tax cuts'. The contempt that the Prime Minister showed for this nation in disowning a letter that he wrote is the contempt with which this Budget is riddled, particularly when one considers the promises that were made that are now being shredded week by week.

The contempt of the Labor Government for Australians is exposed by this Budget. Every taxpayer will pay higher taxes. In the mini-Budget superannuation tax was increased, the home loan interest rebate was abolished, the health insurance rebate was abolished, the dividend rebate was scrapped, and the over-70s pensions were means tested. Now in this Budget the excise has gone up on beer, cigarettes, spirits, and petrol, putting up the price of petrol by 2 cents a litre. New excises have been introduced on heating oil, on fuel oil and on kerosene; and all these excises are to be indexed. In addition, sales taxes are being introduced on a number of previously exempt goods.

These increases in indirect taxes will directly raise the cost of living for the average Australian family by $2.20 a week, according to the Australian Taxpayers Association. The Medicare levy on top of that will cost on average a further $3.70. Indexation of excises will add a further dollar. Those increases are on top of the $8 a week increase which hit families in the so-called mini- Budget. So the total burden on a typical family over the course of a year will be $15 per week-from a Government that told them they would get reduced taxation . That is the impact of only the Federal Government's policy. Honourable members will recall that Victorians had $12 taken from them in the last State Labor Budget. The Labor Government in South Australia has already announced that it will confiscate $12 a week. So the bill South Australian and Victorian families have received from Labor governments is $27 a week, or over $1,400 a year. Looked at another way, the Australian Taxpayers Association claims that a person earning $15,000, receiving a 7 per cent increase in earnings, will suffer a 38 per cent increase in tax this financial year caused by the Hawke Government policies alone. That is a vicious slug for families. It is an incompassionate grab. It is an outrageous and ill-considered confiscation.

Within 24 hours of the Budget being brought down the Prime Minister foreshadowed, first of all on the A.M. program on Wednesday morning, still more new taxes to be introduced. Who will be hit next? Who, when and how? It has not been spelt out. The Budget was not 24 hours old before we were told that more taxes were to be introduced. Money is being confiscated from families so that the Prime Minister and the Treasurer can enjoy themselves with large scale spending in this Budget. Let us not forget that this is obviously a government with no understanding of the real needs of the community. What is particularly pernicious about the excise increases is that by indexing them they will come back and hit the community every six months, so the burden will get heavier and heavier. There will be three increases in the next 10 months imposed by a government that was going to reduce taxation. This measure institutionalises inflation, and by indexing excises gives the Government an interest in sustaining inflation. Still more seriously, it pushes families into an inflationary spiral. The excise increases will push up prices which in turn will mean more excise increases.

Once more, families are hit; and it is the poorer families who are hit the hardest. To make matters even worse, while the Government applies the principle of indexation to excises, it will not apply the same principle to income tax.

This financial year some 300,000 to 400,000 Australians will be forced into the 46 per cent tax bracket. In fact, anyone on average weekly earnings will, during the year, be forced into the 46 per cent tax bracket. These people-ordinary, middle-income-earning Australians-are caught in a taxation vice which is squeezing their prosperity from them so that the Government can go on a spending spree. If the Government understood the world as it was and not as it might dream it to be, it would not damage the community in this way.

It is a sign of the Government's total lack of compassion that, in addition to hitting middle income earners with a massive tax slug, it has hit the elderly. Already they have been sent reeling by the enormous increase in the tax on lump sum superannuation and by the means testing of the over-70s pensions. That burden will now be exacerbated by an assets test on age pensions. We do not know when that assets test will be introduced; we do not know any of the details. The Prime Minister has said that it will take around a year to finalise the details. This is like the superannuation issue-the Government bringing it into the House and then having to tack like a yacht as it at last recognises the concerns when it hits individuals or, like its withholding tax issue, not thinking through the consequences of its actions.

What we know about this tax is that it is an ill-considered, incompassionate measure which will cause vast uncertainty and already is doing so amongst older people. As one pensioner spokesman has said, the Federal Government wants to ' squeeze every possible ounce out of pensioners'. As a representative of the Australian Council of Social Service said, the most objectionable feature of the assets test is that it is focused on only one group of the population, and here we have a form of capital tax on pensioners. Let us make it quite clear that we will not stand idly by and allow this Government to grind down the elderly.

The current occupant of the Prime Ministership says both in this Parliament and elsewhere 'Let us not politicise the matter' as though one can govern by prime ministerial decree. To grind down people in the community, to come into the Parliament and then to say 'Let us not politicise the matter. We do not want any debate. You are not to criticise it' is the way in which he sought to muzzle people elsewhere. He seeks to muzzle people on matters that go to the heart of the very compassion and, indeed, livelihoood of certain people in the community. But there is a distinctly different approach by this quasi-emperor in his own dream world-we are not to have any debate or politicise this matter. We will not stand idly by and allow that to occur without criticism and action. We will not allow this Government to grind down the elderly. If any group in the community needs compassion, assistance and certainty from a government, it is the elderly; and every move this Government has made in their direction has had the completely opposite effect. It is a classic example of our old friend Hawkespeak : Say one thing and do another. As a result, the Opposition will move in the Senate that the whole issue of pensions and benefits be referred to a committee for detailed and comprehensive examination. Any government which places these sorts of burdens on the families and the elderly of Australia has totally lost touch with community concerns and needs; but this is characteristic of Labor governments all over Australia. They repeat again and again, with tiresome self- righteousness, their commitment to compassion; and then they hit the community with tax bills which slash standards of living. It seems to us to be a very curious way of helping Australians.

This demolition of prosperity is not confined to families. As is well known, businesses will now suffer even more. The indexation of excises, coupled with the indexation of wages, means that these tax increases lock industry into ever- increasing cost structures. It became clear a few hours after the Treasurer presented the Budget that his estimates of revenue from the new excises on various petroleum products were seriously understated. He could not even do his sums. What sort of government is it that presents a Budget and says 'We will increase defence expenditure by almost 4 per cent' when, on looking at the tables which contain the implicit price deflator to give us the real increase, we see that the increase is 2.2 per cent? The Treasurer probably thinks that 2.2 equals 4. That is probably why he put 'about 4 per cent' in his Speech. I would like to know how 2.2 per cent is about 4 per cent. This is the man who has totally miscalculated his revenue. The excise on fuel oil will cost the aluminium industry alone $135m. The Treasurer has indicated to us that the total amount to be received will be $122m but the aluminium industry alone will get $ 135m. These increases, in difficult market conditions, could unquestionably put some alumina producers right out of business, as the Treasurer knows only too well. This is the incompetence of a government which imposes job destroying taxes, without knowing that it has done so! The Government had no knowledge that it had done it until the industry notified it.

What does the Treasurer do? He gets officers from the Department of Prime Minister and Cabinet, the Department of the Treasury and the Department of Industry and Commerce together to try to sort it all out for him. Yet Australians everywhere are working on the figures that he has given them. As if those new taxes are not enough industry will suffer from a cut of about 7 per cent in real terms in industry assistance. How can industry be expected to become more competitive if it is caught in this sort of pincer movement? How can industry be expected to become more profitable? How on earth can industry be expected to increase investment and how can industry be expected to create more jobs? These are the measures which work against recovery. If the Government understood the realities of Australia today, if it were not in its own dream world, it would have acted to help, not hinder, industry.

The Government is claiming that these sacrifices-they are real sacrifices indeed-are an integral part of its determination to share the burden equitably and fairly, to achieve, as the Government puts it, social justice. Is it social justice to thrust the greatest burden on the unemployed and hundreds of thousands of Australians living in fear of losing their jobs? Is it social justice to impose an additional tax burden which hits those on the lowest incomes hardest? Is it social justice to hit the elderly with measures which cause untold anxiety? Is it social justice to grab a total of $15 a week since 5 March from families trying to make ends meet? Is it social justice to increase by 38 per cent the tax burden of someone on $15,000 a year? What has transpired is that the Government has turned this Budget into a scoreboard of winners and losers, and the losers have outscored the winners by an appalling margin.

Just as this Government has no political morality, to talk of social justice reveals it to have no social morality whatsoever. These sacrifices have nothing to do with social justice and tragically they have nothing to do with economic recovery and the creation of jobs. The sacrifices are made totally in vain. They will not bring down interest rates. They will not create permanent, secure jobs. They do nothing to reduce interest rates because the spending policies of this Government have led to a massive blow-out in the Budget deficit. The Government, for reasons of its own, seems proud of its deficit. It boasts that it is responsible. A different and very disturbing view is hidden in Budget Statement No. 2, and it is hidden from the Treasurer. He claimed he had read Budget Statement No. 2 line by line but the next day, when he went to the National Press Club, he had to admit that he did not agree with every word that was in it . He had read it line by line and had accepted responsibility for it, but when he was nailed with its consequences he said: 'I could not agree with every word of it'. It is fair dinkum Alice in Wonderland stuff. The Treasurer says one thing in this place and something else at the National Press Club. He takes a line from the Prime Minister who said one thing in New York but came back here and practised something else. This Budget is the antithesis of all that he told the American investors he would do. It is the old classic Hawkespeak again. Why is the Government so proud of its deficit? Why does it boast that it is responsible? I have said that hidden in Budget Statement No. 2 is a quite different and very disturbing view. At page 69 the document states:

Net borrowing by the public sector in 1983-84 could increase by around 2 percentage points of GDP, to about 8 per cent, more than offsetting a likely further decline in net corporate borrowing. Even with a further rise in household net lending, such large shifts in sectoral funds flows might not be achievable without some pressure on interest rates.

At page 70, the document states:

The current fiscal stimulus is large by any standards. The forecasts assume that, in 1983-84 at least, it will be possible to finance the resultant public sector borrowing requirement without significant-

I emphasise the word 'significant'--

increases in the general level of interest rates.

At a time when families desperately need lower housing interest rates to maintain their standards of living and businesses need lower interest rates to become more competitive and to increase investment, this incompetent Government has introduced a Budget which, by its own admission, will do nothing to bring down nominal interest rates and will actually increase real interest rates. We always knew there would be an increase in real interest rates but now we learn that even nominal interest rates will rise. Let there never be any doubt that high interest rates cost jobs. The Budget deficit of $8.3 billion, representing 4.7 per cent of gross domestic product, nearly reaches the disastrous Whitlam Government's record. It is even higher than that of France at the height of the Mitterand folly, a self-admitted folly. What is still more serious is that the deficit will not go away. The Government admits that when it states:

. . . the structural component of the 1983-84 Budget deficit will increase substantially . . .

* * * *

Structural Budget deficits . . . provide an indication of the prospective size of future deficits after the economy has emerged from recession.

We know that the big deficit is here to stay; we know that high taxes are here to stay; and we know that high interest rates are here to stay. The Hawke Government is creating the same growing deficit which was the hallmark of the Whitlam years and it will remain like an albatross around the necks of home buyers and small businessmen. A government which understood their needs and understood the needs of the community would not cause this hardship. How high will the deficit be next year or the year after? We can be sure of only one thing. The philosophy of the Labor Party, not to mention the power brokers of the Caucus, will ensure that the deficit will grow and not shrink. That famous figure of $8.3 billion was not achieved as a result of a careful assessment of spending priorities; it was not the result of a considered assessment of the degree of fiscal stimulation needed at the time of the Budget; it was set months ago as a result of negotiations between the numerous factions of the Labor Party . The Government showed a quite extraordinary preference for doing a deal with its own left wing before doing a deal with Australia. The Government named it months ago when the growth rate was allegedly 0.5 per cent and sticks to it when it admits that the growth rate is 3 per cent. The Treasurer knows the truth, and that is why he squirms right now. On 24 June he admitted that. He stated:

. . . the $8.5 billion illustrative deficit I used in the Summit--

This is the Treasurer speaking-

would be far more stimulatory in the context of a more strongly growing economy than it was at the time I presented it.

That is straight talking from the Treasurer. As I have said, at the time of the National Economic Summit Conference his growth forecast for 1983-84 was 0.5 per cent. Now it is 3 per cent. If the Treasurer thought $8.5 billion provided the right balance of positive stimulation in April, I wonder whether in his heart he really believes that $8.5 billion is dangerously excessive now. If intellectual integrity is our guide, he has to admit that the figure is too big.

While all Australians are having to make sacrifices under this rapacious Government, their sacrifices unquestionably will do nothing to reduce unemployment. This Budget fails totally to raise the hopes of the nearly 900,000 men, women and young Australians-including over 100,000 discouraged workers-who will be out of work this year. It can only exacerbate the fears of the hundreds of thousands of Australians who live in fear of losing their jobs. The Age editorial of 24 August stated:

This Budget offers no early return to the dignity of secure employment.

Yet reducing unemployment was the solemn commitment of this Government before the election. The creation of 500,000 jobs over three years was the commitment of the Treasurer at the Premiers Conference. That promise was just a cruel trick on the unemployed and a cheap electoral gimmick to deceive those who believed the false promises of this Government.

As I have already pointed out, the Government now admits that unemployment will 'edge up' by half a per cent in 1983-84 and that the numbers in the dole queue will increase by 26 per cent in 1983-84. It now seems possible that unemployment could be 90,000 higher by mid-1984. This is the Government that associated itself with a Premier who said: 'What we have to be about is jobs, jobs, jobs'. The only person who has been dinkum about this has been the Minister for Employment and Industrial Relations (Mr Willis), who said that unemployment would continue to rise. The Prime Minister takes the opposite course and continues to deceive.

The Government knows that to create 500,000 permanent jobs over three years would require growth rates of over 5 per cent per annum, it knows that it would require increases in employment of over 200,000 per annum and it knows that only once in the history of this country has the economy been able to generate over 200,000 jobs in one year. That promise of 500,000 jobs is now exposed as a blatant fraud. To cover up the fraud the Treasurer has tried, in the Budget, to juggle the figures. He knows that, at the very least, 50,000 of his alleged new jobs in 1983-84 are temporary jobs in job creation schemes. Yet he persists in the misleading impression that these are lasting jobs.

This Government knows that if the economy and employment are to recover Australian industry has to be made more competitive. Yet the Government seems more intent on making Australian industry even more uncompetitive than it already is. It supports a 4.3 per cent wage increase this year in the face of the 70 per cent of Australians who support the continuation of the wage pause; it supports full wage indexation, whereas other countries continue to moderate wage demands. Key industry organisations have given the Government very clear warnings indeed. The Metal Trades Industry Association has warned that tens of thousands of jobs will be lost in the rest of this year and that the only road to recovery is through becoming more competitive. But the Government chooses to ignore these business realities. It has never recognised the importance of competitiveness to industry generating more jobs. At the national wage hearing the Hawke Government's counsel made the following extraordinary statement:

In any economic circumstances marginal firms or industries will experience economic difficulties. This is part of the normal process of growth and re- adjustment within the economy. The Government sees no compelling reason why these firms or industries should be subsidised by a wage system.

The Government gives these so-called marginal firms no chance to compete; it attacks their viability and survival with wage increases and higher taxes and charges. So much for a government which claims to understand business in a competitive world. I have said time and time again, the reality is that we will not get more jobs unless we get back to allowing industry to make more profit and become more competitive. Honourable members opposite have always regarded profits as some accountant's form of leprosy. The Government will screw them down even further. It puts to one side, as a consequence of its own dogma, the profits-jobs nexus. Unless business can become profitable again, it cannot take on more employees, let alone keep the employees in its own ranks.

This Government talks of creating jobs. It lifts a small number of people out of the dole queue, returning them again some six months later. The Government keeps alleging that it is creating permanent jobs, but they are only temporary jobs.

What is required is a return to a competitive environment so that this country can get moving in conditions of growth and conditions of develoment with a government that openly espouses and acknowledges the need for the creation of wealth rather than a government that, through a Prime Minister, says it is going to tax wealth. At the time of one of the worst economic recessions, when every encouragement should be given to people to improve their lot, he is to do yet another examination to slug them further. Let us not talk about further taxes aimed at wealth at a time when what we really need is a government creating a climate for the very conditions to create wealth. It is no wonder this Government has demanded sacrifices and yet done nothing to solve our fundamental economic problems.

Its total incompetence is a clear product of the totally inadequate way the Budget has been formulated. First, there has been a very serious lack of effective consultation within the community. The previous Government each year consulted over 100 different groups or organisations before putting together its various Budgets. It did this for very good reason. The Budget is the Government' s most important economic statement. A government genuinely sensitive to the concerns of the community as a whole consults the community before determining its economic policy. A government which professes to be bringing Australians together would consult Australians before determining its economic policy. The Labor Government has abandoned those procedures and replaced them with its Economic Planning Advisory Council. There was no consultation with the young, with women or with Australian families which have to pay the bills for the Government's spending programs. Until recently there was no consultation with small business which provides over 70 per cent of Australia's private sector jobs. The Government has turned its back on all these people. What is more, the Government's consultations with EPAC which, I might say, came before its all important first Budget, were absolutely perfunctory. The Economic Planning Advisory Council met little more than a month ago. It first met after most detailed decisions on the Budget had already been taken. It first met long after the Government had committed itself to a $8.3 billion deficit and a return to full wage indexation made retrospective to January this year.

Secondly, Ministers, and in particular, the Prime Minister, have been totally preoccupied throughout the budgetary gestation period with crises of their own making. When they should have been developing an integrated approach to economic management the most senior Ministers have been before a royal commission explaining their involvement in a government scandal. The result is a Budget which lacks coherence, detailed consideration and necessary sensitivity to its impact on both business and families. No wonder the former Labor leader, the present Minister for Foreign Affairs (Mr Hayden) and a member of the Government' s Cabinet committee on the economy has said with characteristic candour:

To the extent I've understood what's been going on I support pretty much what's being done.

It is little wonder, if a senior Cabinet Minister and former Treasurer is unsure of what has been going on, that the rest of Australia is absolutely bamboozled. Our own Treasurer cannot even get his sums right.

I have already said that this Budget ignores the real needs of the Australian economy. Our basic objective must be sustained economic growth. That is the Liberal and National Party approach. Only through growth will jobs be created. Only through growth will we be able to generate greater prosperity to help the needy. To achieve higher growth we must create a flexible economy in which Australians are able to respond to new and ever-changing opportunities. We must reduce both inflation and inflationary expectations to levels which do not threaten our international competitiveness and investment. We need wages growth which is consistent with industry's capacity to sell, not consistent with this Government's capacity to sell out. This means short term restraint in exchange for greater sustained growth and greater long term prosperity for all Australians.

We need a resurgence in consumer confidence and, therefore, spending and economic growth. This will require lower interest rates, more secure employment prospects and lower, not higher, taxes. We need a resurgence in business investment. We will not get it through this Budget. This will require expectations of increased returns on investment-that is, profits based on expected higher consumer demand and lower costs, especially wages and interest rates, and confidence in responsible economic policies. If we get these five factors right we will be able to build on the brighter prospects for growth which, honourable members should remember, have appeared because of a resurgence in economic activity in the United States of America; because of the breaking of the drought; because of the impact of the wages pause; and because of the impact of last year's tax cuts.

This Budget and the Government's other economic policy initiatives in no sense provide a coherent strategy capable of achieving these objectives. It does nothing to get the vital engines of growth into any gear let alone into top gear . The Labor Party talks about economic growth but it does not seem to understand that there cannot be any growth if Government insists on taxing ambition, enthusiasm and achievement-the very things which create growth and greater prosperity for community benefit. If we want to go forward as a country we need to focus on the creation of more prosperity. If we want to stimulate the Australian economy we have to provide incentives for Australian people. Yet in this Budget the Government has done the exact opposite. It has killed incentive by heavy taxation. But, of course, that is the Labor approach. It does not understand the basic principle that, if an economy is to grow, people have to be given a chance to get ahead. They have to be given a chance to take advantage of the opportunities we have for sustained recovery. A good Budget would have made the most of those opportunities. This Budget ensures that they are missed.

This Government just does not understand the needs of the community; it does not understand the needs of families; it does not understand the needs of businesses; and it does not understand the very real needs of Australia. What is required is the very reverse of what has transpired through this Budget. We need increased consumer spending, increased confidence, increased profitability and an increased awareness by the Government of a need for compassion towards those in real need. Instead of the taxing, the slugs and the constant breaking of promises we want a return to programs that will look after the needs of the community, the families, the businesses and the very real needs of Australia.