Deficit claim last straw

Press, 17 December 1988, Page 1

Deficit claim last straw

What provoked Mr Douglas to go public with confidential Cabinet material was the report (“The Press,” December 16) of the single detailed response Mr Lange has so far made to any of Mr Douglas’s long catalogue of , claims. Mr Lange had said it was not correct that he had suggested — as Mr Douglas was claiming — that there was a $3.2 billion blow-out in the Budget deficit projection when the Cabinet had already decided to reduce this to $1.4 billion. The Cabinet had gone through the figures and made its commitments the following week, Mr Lange said. He was referring back to his special press conference on June 29, when he announced that there was a blow-out in the deficit forecast, and that the Government would not permit it to occur. The reason he went public was that "wild rumours were circulating and had to be stopped.” The papers Mr Douglas photocopied for “The Press” show that on June 22 19 of the 20 members of the Cabinet attended a Cabinet Policy Committee meeting.

That committee “agreed that expenditure reductions and revenue increases totalling about $2 billion be made in 1988-89 to produce a fiscal deficit of about $1.2 billion.” That decision was considered by the full Cabinet at a meeting on June 27, two days before Mr

Lange announced the forecast blow-out to the public.

The minutes of the June 27 meeting noted “that Cabinet Policy Committee had agreed at its meeting on June 22 that expenditure reductions and revenue increases totalling about $2 billion be made in 1988-89 to produce a financial deficit of about $1.2 billion.” Mr Douglas said that in spite of the decisions made on June 22, the Prime Minister’s office had leaked allegations the next day that the Treasury had got its estimates badly wrong and that the deficit had gone through the roof.

At no time had there been any indication (from the Prime Minister’s office) that the decisions to bring about an acceptable deficit result had already been taken.

The July 4 Cabinet meeting’s minutes showed that the Cabinet had “noted that Treasury’s most recent forecast shows the financial deficit to be $1.6 billion” and had “agreed that the financial deficit in 1988-89 be around $1.4 billion.”

“The facts speak for themselves,” Mr Douglas said.