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Legislative Assembly for the ACT: 2003 Week 5 Hansard (8 May) . . Page.. 1724 ..

MR SMYTH (continuing):

As if to further undermine the Treasurer's credibility on economic affairs, having warned about upward pressure on prices, he then contradicts his own words by forecasting a drop in the consumer price index from 2.75 to 2.5 per cent from 2002-2003 to 2003-2004. That is very odd. So I fundamentally disagree with the Treasurer's budget parameters, and I believe events over the coming 12 months will prove my view of the economic situation and outlook to be correct.

The budgets for 2002-2003 and 2003-2004 have each referred to maintaining a balanced budget over the economic cycle, which the Treasurer defines as being from 2002-2003 to 2005-2006. It was intriguing to see the phrase "economic cycle"appear in the first Labor budget. It is disturbing to see this phrase repeated in the second budget.

Let me pose a simple question. How can the Treasurer, in June 2002 and subsequently in May 2003, assert that an economic cycle will run from 2002-2003 to 2005-2006? The simple answer to this question is that he cannot-the claim by the Treasurer is ridiculous. It is not possible, in an ex ante context, to say what period an economic cycle will cover. Before any attempt is made to say that an economic cycle has taken place, it is necessary to define what parameters will be used to identify the economic cycle.

What parameter is our Treasurer using? Is he using interest rates? Is he using gross domestic product? Is he using an index from the Australian Stock Exchange? Is he using unemployment? Is he using other factors? We do not know. Irrespective of what parameter he is using, it is clearly a nonsense for the Treasurer to say that there will be an economic cycle between 2002-2003 and 2005-2006.

The only way we can identify any type of economic cycle is to look at what has happened-that is in the ex post sense. It is only then that we can see what happened to interest rates, the rate of inflation, building approvals, the ASX 200 index and to unemployment. Each parameter will have its own characteristics, so it is likely that there will be a number of economic cycles. They will coincide sometimes, and at other times they will not. Sometimes an economic cycle or series of cycles will become apparent only when very long periods are examined, such as the index of the Australian Stock Exchange when observed over the last 150 years or so.

A reasonable conclusion to my comments on this aspect of the Treasurer's budget-line 3, page 1 of the budget-is that, as far as economic concepts are concerned, he does not know what he is talking about. This reference to economic cycle is one of the more ridiculous and ignorant statements in this budget. Perhaps he meant-for convenience-electoral cycle. The Treasurer clearly has no idea what he is talking about. This rubbish should never appear in a budget, let alone in a government publication. Mr Speaker, the Treasurer may believe that he is a good accountant but, as an economist, he has failed.

There is no doubt that the bushfires the ACT experienced on 18 January this year was an event of the most dramatic proportions for the territory. The loss of life; the toll on native, domestic and farm animals; the loss of homes; the damage to much of the territory's infrastructure-forests, national parks, urban assets and firefighting equipment-was unprecedented. The outcome of this disaster was an extraordinary demonstration of the spirit that exists within our community as we combined to recover

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