The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 47

Spot et 5 vt2 11 JL 1L22 --v f' Deep in Parliament House a handful of politicians and public servants are shaping the Budget we had to have. FIA CUMMING reports. TREASURER Peter Costello will stand up in Parliament at 7.30pm on August 20 and detail government spending cuts totalling between $6 billion and $8 billion over two years. The cuts will be the biggest announced by an Australian Government. They will signal a sea change in the role of Federal Government as well as a massive turnaround in our national savings.

They are designed to stem the flow of red ink in our national accounts presided over by the former Labor Government and to help the country recover from its debt burden. But while Costello will have the stage on that night, he will not take all the credit nor the blame. As well as Costello and Prime Minister John Howard, four other ministers and a handful of public servants and advisers are part of the inner circle which is crafting the core of the Budget Secreted away behind the imposing brass and glass doors of the Cabinet room, deep inside Parliament House, they form the Expenditure Review Committee, commonly known as the Razor Gang. For the past two weeks, ERC ministers have worked steadily, often from 9am to 10pm or later. Line by line, they have been going through each portfolio to find new ways to shave, slice and slash spending.

By the end of this week, they will have the first draft of their work completed. Unlike its predecessors, this Budget will reappraise the past and try to restructure the future. The fallout is bound to be massive as many interest groups feel the pain of reduced funding. The unemployed, universities, tertiary students, the public service, the ABC, the migration program, assistance to industry, foreign aid and diplomatic posts, Medicare, pharmaceutical benefits and legal aid will be affected. There will also be new revenue measures read higher taxes in selected areas.

Superannuation, the mining industry and tourism are all braced for a kick. Nobody in the Government doubts this first Budget will be crucial. It will set the framework for the next two Budgets and be the test of the Government's credibility. The mix of personalities that Prime Minister John Howard has chosen for the crucial ERC role is important in shaping its final decision. Howard is chairman of the ERC and undisputed leader of its discussions.

His deputy is Costello. Third is Finance Minister John Fahey, keenly supported by his departmental head, Steve Sedgwick. The other members are Primary Industries Minister John Anderson (the only National Party representative), Health Minister Michael Wooldridge and Assistant Treasurer Jim Short. KEY advisers often at the meetings are Howard's economics adviser Arthur Sinodinos; CosteUo's principal adviser Peter Boxall and Department of Prime Minister and Cabinet head Max Moore-Wilton. Cabinet secretary Michael L'Estrange is the main note-taker.

While he says little in the meetings, he has direct access to Howard to make his opinions known. Surprisingly, Treasury secretary Ted Evans has not attended the ERC. In his place he has sent a deputy secretary, Gary Potts. The ERC members are mutually sup- RAZOR GANG John Howard and (from left) John Fahey, Michael Wooldridge, Jim Short, Peter Costello and John Anderson. portive in private.

No obvious personal tensions have emerged to blunt their focus and Fahey and Costello are said to have formed a relaxed friendship. In their meetings, the mood is serious but enthusiastic. For its members, this is what being in government is all about the power to make decisions for the good of the nation and the Government, even though those decisions are proving very tough. Howard is convinced, based on feedback from the public, his MPs and opinion polls, that Australians are deeply concerned about the state of the nation's finances. Although there will be pain in the Budget, Howard has drummed the message home to Coalition MPs that the Government was elected to fix the economy.

"Any Budget is exciting but this one is special the first by a new government in 1 3 years," said another minister. "It will set the stamp on the Howard regime." The process began with the Finance Department putting forward suggestions, some of them recycled from the period of Labor Government, some so tough they were described by some ministers as One by one, ministers are called in and asked to discuss the Finance proposals, which are presented in two "green papers" one containing a financial summary, the other more argument about the pros and cons. Despite his heavy workload on other issues such as guns last week Howard chairs the ERC most of the time. He is far more than a nominal head. A former Treasurer in the Fraser Government, Howard is one of only two ministers in the ERC with experience in government administration.

Fahey, a former NSW Premier and Treasurer, is the other. But Howard's long and often painful experience in politics, especially as Opposition Leader, has instilled in him the knowledge that politics is as important as economics in any Budget Cautious Howard has been intent on maintaining public faith in his election promises as far as he can. In the health portfolio, he sided with Wooldridge in opposing major cuts which could have been interpreted as undermining Medicare, however tempting they were in financial terms. "It would be a surprising prime minister who was not thinking about the way the issues are going to have to be sold and the perceptions among voters," one minister said. Openness, a Howard buzzword, is also a theme for the ERC.

Ministers who object to Finance proposals have had every opportunity to argue for alternative proposals and some of them have succeeded. Despite Howard's big input, some ministers believe Costello has the most difficult role. Within the Government, some MPs who are starting to worry that Costello is drifting too close to the arrogant Paul Keating model which voters rejected. COSTELLO has also been criticised by MPs in the past for being lazy. But ministers agree that whatever Costello's motivations, he has thrown himself into the Budget preparations and is working as hard as any minister.

He is also determined to achieve a real turnaround in the Budget deficit, to the extent that some of his colleagues believe he is too concerned about his reputation and too closely allied to his Treasury economic rationalists. In the ERC, Costello, a caustic debater, cannot dominate. Sources say the discussions are polite and calm. After Costello, Fahey had the most to lose Howard and the fearless five who are finding 46 THE SUN-HERALD, July 21, 1996.