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Tuesday, 10 December 1974
Page: 3323

Senator COTTON (New South Wales) - When I listened to the Minister for Agriculture, Senator Wriedt, talking tonight on another matter, apologising for his Government, excusing himself and blaming everbody else I was reminded of something I heard long ago. He might find it hard to detect the connection. I heard talk about rowing and it was this: 'It took from death most of its terror by removing from life all of its comfort. ' The talk was about the invention of a sliding rowing seat. I was thinking about the Labor Party taking from most of us nearly all of our comfort, most of our joys, our happiness and our well-being. One is very tempted tonight on this Loan Bill to extend the sitting of the Senate a few days and have a few things to say about some of the misapprehensions, mistakes of fact and self-delusions of the Government.

Senator McLaren - Why don't you? What is stopping you?

Senator COTTON - You would like me to do it, would you? Good. This Bill was not opposed in the House of Representatives when it went through there and therefore it will not be opposed here. It is said to be a machinery measure. When one thinks about it as a machinery measure one realises what a broken down piece of machinery the Government's economic, monetary and fiscal policies are. When we hear the sort of light witticisms of people like Senator McLaren we can see what little help the Government gets from its supporters. The Minister for Agriculture in the second reading speech, said this measure is one that has come into the Parliament before. That is true, but this Bill comes in three to four months earlier than any previous similar Bill has. This is really because of the tremendous size of the deficit that the Government is now facing. If honourable senators cast their minds back to the famous Budget Speech on 17 September, a Speech which has since been much affected by change, they will recall, I am sure, the Government's undertaking to have a deficit of approximately $570m. In response to questioning, Mr Crean, the current Treasurer, has said his deficit expectation is of the order of $ 1,850m. It may well, with the tendency in the economic scene, become greater than that. However it is a rather massive change from the forecast on 1 7 September for a deficit to grow within 2 months from $570m to $l,850m. You really have to be very brave and capable of massive self-delusion to convince yourself as a government that you are not in some way responsible and that some part of this is not made by you and is not homegrown. To go around the place trying to talk yourself out of it by blaming other people around the world is to me not real and I really must say that I thought better of the Government than this.

There is a long catalogue of events and comments made by various people on the Government side. I have a summary of them here. It is just a record of futility and mistakes. The Prime Minister, Mr Whitlam, had this to say on 6 May: . . we are winning the fight against inflation. Our policies are working. The latest consumer price figures have shown a dramatic and encouraging drop in the inflation rate.

Let's keep up the good work. Let's not undo these policies now that they are working, because the Country Party and (he Liberals would undo them. They have promised to remove our restrictions on the inflow of foreign money.

Really, what a dreadful thing to promise. He said:

They have promised all sorts of electoral bribes. They have promised to cut taxes. Imagine it. Cut taxes to fight inflation.

On 12 November the Prime Minister announced measures which would do exactly all those things; he proposed to cut taxes, and restore the flow of the overseas capital. Can the Government wonder that people like me and many people in the community are, to say the least of it, really fed up with all the excuses it is trotting out and with all the nonsense it is going on with? The Government is responsible. It must accept the responsibility. Part of its problem has been the continuous process of chop and change. I have here about 12 different announcements made by various people in the Government totally contradicting each other at about monthly intervals.

What the Government has achieved in Australia by its actions is a state of confusion and crisis and a complete lack of confidence. What people are worried about in the present situation is that the massive deficit the Government has now created has to be funded. It is in the process of funding it now, earlier than normal, and it could lead very likely to another surge of demand inflation. Nobody is pleased about that. No one takes any delight in it. Anybody who wanted to help would try to do so. Reference to the failure of the Commonwealth to have any ability to control prices and incomes ought to be set in the context that the State governments offered to refer powers in a co-operative venture, which would have been much the wisest thing to have done.

It is clear from the Government's activities that its original economic measures produced a massive demand surge. That in turn produced an acceleration of the cost inflation with which the Government is now living and the Government is now in very great danger- so are we because we are in it with the Government- of another demand inflationary position. If the Government has in mind positive, rational, sensible steps to overcome this problem by working with the community and the State governments I wish it would say so. I do not think that the Government has made any rational attempts at all. It has tried to excuse itself. What it has failed to do is to come to grips in the total community with the demand that is being placed on the available resources. Until that is done by all governments working together to bring into balance the total demand on resources with the available resources, no measure will succeed. I do not believe that the Federal Government will succeed acting by itself. It needs the co-operation of the State governments and of its State colleagues, and it must work to achieve that.

This particular measure is a clear operation of government funding transactions. It is stated that there are 3 funds- the Consolidated Revenue Fund, the Loan Fund and the Trust Fund. No mention is made of the National Debt Sinking Fund which would have been worth adverting to because I think that in Australia we are going back, with this sort of deficit financing in which we are involved, into an increase in our indebtedness in the National Debt Sinking Fund which has been of relatively lesser and lesser consequence in the years of Liberal-Country Party administration and it will again become some factor in our lives. It would seem after five to six months of the current transactions, that the Consolidated Revenue Fund will run out of money because of the massive increase in the expenditure which leads to the massive deficit. Normal procedures are being followed and they were followed in the past to cover deficits of much less magnitude. Some of that particular expenditure is being charged across by a switching process to another fund. This procedure is now proposed.

The Bill authorises a technique to borrow money for defence purposes so that to the extent necessary- it is not stated- defence outlays for the balance of the year can be charged to loan funds and a deficit avoided in the Consolidated Revenue Fund. No quantum of the total borrowing is stated, and the size of the deficit is not finally known but it is thought to be about $ 1,850m now. The order of borrowing may be $700m. What we need to know in due course is how the Government proposes to handle the problem because what it is really doing is expending a great deal more money than it has, and it must find the money somewhere.

Clause 3 of the Bill is quite specific. It does not seem to me that the Bill leaves any loopholes in any way. It seems quite a straightforward piece of legislative machinery and exercises the control of the situation which one would expect. It is the situation that is in trouble, not the Bill itself. The Government will have to borrow money in one way or another to make up the deficiency that is caused by the Government's excessive expenditures which, I think, in many cases have elements of imprudence, improvidence and extravagance.

It is the Government's job to do these things. There are 3 ways of funding the Government's excess expenditure or deficit, call it what you will. One is by public loan raising. Of course, the Government could get the Reserve Bank to take securities for it, treasury bills and treasury notes which, in effect, will generate excess liquidity unrealised and add to inflationary problems. The Government can switch around in its funds a bit more yet. The general impression one has without being told by the Government is that the Government will have to go back into the loan market to borrow money to fund expenditures in excess of income. That final choice is yet to be made. I should imagine that that final choice will be looked at perhaps in March or April next year. That will be a better time to judge more accurately the final conseqences of the acts of this Government and the final outcome of a Budget which has turned out to be almost totally misshapen and a disaster.

What the Government is looking at in the Australian community- of which, of course, the Government is a part- is the result of improvidence, a continuing state of confusion and a state of increasing alarm and growing despondency. When one looks at all these things one has to say: Is this just from incompetence or is it by deliberate design? Whatever it is people will pay with their savings, with their jobs and with their future. It therefore gives the Opposition no pleasure at all to have to say these things but they are the truth. The Bill will be passed with our approval and our support because we want the responsibility to remain where it properly belongs, with the Government of this country currently led by the Prime Minister, Mr Whitlam.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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