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Thursday, 6 October 1983
Page: 1429


Mr ROBERT BROWN(11.23) —Prior to the last election, as part of the total policy package which was presented to the Australian people by the Australian Labor Party, a document was issued called 'National Recovery and Reconstruction Plan'. Contained within that document was the statement:

We-

that is, the Labor Party-

reject the policies which have led us into depression and which prevent sustained recovery.

That statement went on:

The principal thrust of Labor's economic strategy will be to reject the policies of contraction and embrace the policies of expansion.

The first significant opportunity which the Labor Government had to honour that undertaking was the presentation of the Budget for the current financial year. I know that some quite extraordinary statements have been made by the conservative forces in the Australian community concerning the general strategy which was contained within that Budget and the possible success which that Budget will have in achieving its clearly determined, clearly defined and clearly articulated objectives. The criticism of the Budget has been contained largely within the Liberal Party and the National Party. All other responsible commentators in Australia have generally applauded the Government's intention and the very effective way in which the Government was able to realise its intentions and pursue its objectives.

But we have a responsibility to the Australian electorate at large to convince it not only that that policy undertaking we gave prior to the last election has been honoured as a result of the details of this current Budget but also that the Budget represents a more expansionary policy by the present Government and a rejection of the policies of contraction which were pursued by the previous Government over a period of seven years often incoherently and inconsistently, and certainly without any significant success-in fact, with very great continuing and accelerating damage to the Australian economy. I believe that the Budget can be shown to be expansionary and certainly more expansionary than the alternatives may have been. A very significant aspect of the Budget is the fact that to a very large extent it is also redistributive.

But it is not sufficient for us to claim that the Budget is expansionary simply by looking at the aggregate amount of the Budget deficit. We need to indicate that the Budget is more expansionary than a Budget provided by the Opposition would have been had it been in government. Despite the fact that the previous Government did not remain in government, we know now that the projection of its deficit, with a continuation of existing programs into 1983-84, would have resulted in a Budget deficit of between $9.6 billion and $10.4 billion. That fact is well known. It has been well canvassed and it is well understood by the Australian people. But the former Treasurer, the honourable member for Bennelong (Mr Howard), for whom I have some personal regard, on the AM program on 6 July this year said that had his Party been in government its Budget deficit would have been between $6 billion and $7 billion. He established that $7 billion as a very firm ceiling. That is absolutely incredible. It is absolutely incredible that the honourable member for Bennelong, in a quite uncharacteristic, dishonest comment in relation to that Budget, should have made such a declaration. The Opposition has not addressed itself to the way in which it would have sought to reduce a projected Budget deficit of between $9.6 billion and $10.4 billion to a ceiling of $7 billion.


Mr Simmons —Just rhetoric.


Mr ROBERT BROWN —Exactly, it is just rhetoric. It has been exclusively rhetoric without anything more substantial to substantiate that rhetoric. Had the previous Government been able to bring about a ceiling of $7 billion in its Budget deficit that would have represented further cuts in expenditure of between $2.6 billion and $3.4 billion or, alternatively, an increased rip-off from the Australian taxpayer of between $2.6 billion and $3.4 billion. The Opposition has not adequately explained the approach it would have taken in order to reduce that projected Budget deficit from at least the $9.6 billion to the $7 billion ceiling which it claimed it would have pursued. It was an attitude which was quite uncharacteristic of the honourable member for Bennelong . As the Treasury spokesman for the Opposition, he has the responsibility to take the opportunity to come into this chamber and explain how the Opposition proposed to reduce the deficit to that extent. If we compare our Budget deficit with the Budget deficit the Opposition claims it would have pursued, we find that we have honoured our undertaking to the Australian electorate by providing a Budget which is significantly more expansionary to the extent of $1.5 billion than the Budget for which the Opposition would have been responsible had it been in government and attempted to pursue that absurd proposition about a maximum deficit of $7 billion which it has canvassed around Australia.

As I have said, however, it is not sufficient to look just at the aggregate amount of the Budget deficit. We also need to examine the proportions of that deficit which represent the domestic deficit-that is really the expansionary component of the deficit-and the overseas deficit. In 1982-83 the domestic deficit was $2,482m. Of course, that deficit resulted to a large extent from a reversal of the approach which had been made by the previous Government. That Government had, in fact, budgeted for a domestic surplus which is itself contractionary. It had budgeted for a surplus of something in excess of $200m. As a result of the blowout in the defict last year, we finished up with an expansionary domestic deficit component for that financial year of $2,482m. This year we have provided for a domestic deficit of $5,744m, a significant increase in the expansionary approach in fiscal management.

To determine the expansionary nature of the Budget we also need to examine the proportion of that Budget which is structural and the proportion which is cyclical. The cyclical component of the Budget is that proportion of the Budget deficit which results from the cyclical downturn in the level of economic activity. The structural component of the deficit is the amount which represents a positive discretionary approach to expansionary policy by the Government responsible for that Budget. Of the total roughly $8.5 billion deficit the cyclical component is about $5,000m and the structural, discretionary and deliberate component is about $3,500m. So $3.5 billion represents the deliberate intention on the part of this Government to be more expansionary and to honour that undertaking given to the Australian electorate before the last election which was overwhelmingly endorsed by the electorate.

Also, we can look at the proportion of gross domestic product represented by this proposed deficit. The deficit represented 2.8 per cent of GDP in 1982-83. This year it will represent 4.7 per cent. That is again a very clear and firm indication of the fact that this Government has honoured its commitment to the Australian people to be more expansionary which, I repeat, was overwhelmingly endorsed by them in the decision they made on 5 March. The estimated increase in total outlays for this year is 15.8 per cent, with an anticipated inflation rate of 7.5 per cent. That is further evidence of the expansionary nature of that Budget.


The DEPUTY CHAIRMAN (Mrs Darling) —Order! The honourable member's time has expired.