30th Parliament · 1st Session
Mr SPEAKER (Rt Hon. B. M. Snedden, Q.C.) took the chair at 2.15 p.m., and read prayers.
- Mr Speaker, I wish to inform the House that on 8 July His Excellency the Governor-General determined the appointment of Senator the Hon. Ivor Greenwood, Q.C, as Minister for Environment, Housing and Community Development. This action was taken, as honourable members would know, as a consequence of Senator Greenwood’s continued illness. I am sure that all honourable members will wish to join me in expressing good wishes to Senator Greenwood, his wife and family.
On the same day His Excellency accepted the resignation of the Hon. Kevin Newman as Minister for Repatriation and appointed the Hon. Kevin Newman and Senator the Hon. Peter Durack to hold offices of Minister for Environment, Housing and Community Development and Minister for Repatriation respectively. As a result of these changes the following alterations in representational arrangements will operate in the Senate: Senator Carrick will represent the
Minister for Environment, Housing and Community Development, and Senator Durack will represent the Minister for Employment and Industrial Relations (Mr Street), the AttorneyGeneral (Mr Ellicott) and the Minister for Business and Consumer Affairs (Mr Howard). Mr Newman will represent the Minister for Repatriation in the House of Representatives.
On 23 June His Excellency agreed to a change in the administrative arrangements order which placed the responsibility for child care matters under the Minister for Social Security (Senator Guilfoyle). I further inform the House that I have appointed the Hon. A. A. Street to assist me in women’s affairs matters and the Hon. A. A. Staley to assist me in matters concerning the arts.
I also inform the House that the Deputy Prime Minister, the Rt Hon. J. D. Anthony, left Australia on 6 August 1976 to visit Iran and Europe where he will be having talks on trade and economic matters with different governments. He is due to return on 24 August. In his absence Senator the Hon. Robert Cotton will act as Minister for Overseas Trade and the Hon. Peter Nixon will act as Minister for National Resources. Senator Cotton will be represented in his acting capacity in this chamber by the Hon. John Howard.”
- Mr Speaker, Richard Gardiner Casey died on 1 7 June. In the history of our country few men have attracted, or earned, the respect due and paid to Lord Casey. Not only was his public contribution one of great distinction and lasting value; he was also a man of integrity and enormous common sense. He was the kind of man who imparted stature to the institutions he served. The Australian people can count themselves immensely fortunate to have had him as a servant over such a long period.
When I became a member of this Parliament in 1955 I found that Dick Casey was always prepared to listen and to help. One of his great qualities was that he was always prepared to assist younger people and to share his experience with them. I first came to know R. G. Casey through my family. He and my father were close friends over many years. They grew up together and they went to school and university together. I recall that they were both interested in automobiles, a part of history that might not be widely known.
Lord Casey was an engineer by training, and proud of it. He wanted to understand how things worked and why. He always believed that the more engineers in Parliament the better it would be. At one stage my father and he became interested in a new engine designed by A. G. M. Michell. I am advised that at the time there were discussions about the engine with 2 major American firms but unfortunately, even though apparently the engine went very close to being sold to one of those firms, the sale did not quite come off. The Depression hit immediately afterwards, and that was the end of a radical new design motor. It was typical of Lord Casey that he would try to help someone with a good idea. They attempted to promote the engine. They were unsuccessful.
One of Lord Casey’s most impressive characteristics was his immense capacity for work. His industry was remarkable, and it was this extraordinary application that enabled him to undertake so many careers in the course of his lifetime. He was, at one time or another, a soldier, an administrator, a politician, a diplomat and a ViceRegal personage. In all of these careers he served with conspicuous success. In 1 9 1 4 he volunteered for the Australian Imperial Force and served with distinction at Gallipoli and on the Western Front. He was mentioned in dispatches, and for his valour he won the Distinguished Service Order and the Military Cross.
From 1924 to 1931 he served his country in the External Affairs Department as Australian political liaison officer in London. His political career commenced in 1931 when he became a member of this House for the seat of Corio, a seat he held until his first resignation from the Parliament in 1940. During the period of the great Depression he served in several portfolios. He was Assistant Federal Treasurer from 1933 to 1935 and Federal Treasurer from 1935 to 1939. As Treasurer he took an active role in the development of a national insurance scheme which, for reasons beyond his control, was never implemented. From 1937 to 1939 he was Minister in charge of the Council for Scientific and Industrial Research- an association he continued after the war and through his retirement and one of great lasting benefit to that organisation and to the nation.
Lord Casey was a Liberal in the full sense. He was a man of progressive instincts, not fearful of change. He welcomed the challenge of a new circumstance, a new job. He was often ahead of his time and keen to play a part in defining a new role for his country. He represented Australia to the world in a critical period of our history. In 1940 Lord Casey resigned from the Parliament to become the first Australian Minister to Washington. He used his great energies in making sure that Australia’s position was well known to the American Administration and the President of the time, Mr Roosevelt. In 1942 at the request of the British Prime Minister, the late Sir Winston Churchill, Lord Casey assumed the position of Minister of State for the Middle East and had the rank of Cabinet Minister in the British War Cabinet. Speaking in the early part of this decade about the controversy that surrounded his acceptance of such a post, he remarked that such an appointment in the Middle East was far more important than the post he had left in Washington. He appreciated the need for Australia to recognise that its security depended on events in a number of areas of the world.
In 1943 he took up his first Vice-Regal position as Governor of Bengal. During his time there from 1943 to 1946 he experienced at first hand contacts with leaders of the Indian nation which would stand him in good stead when he assumed responsibility for Australia’s foreign policy. In 1949, in that vital election for Australia’s future, Lord Casey returned to active politics as the representative for the seat of La Trobe. He held the seat until his retirement from politics in 1960. In 2 tasks which he undertook following the 1949 election he showed again the importance he placed on looking to the future and his concern that Australia should develop into a strong outward looking and tolerant nation. Immediately after the election he became Minister for Works and Housing and continued his involvement with the CSIRO, being Minister in charge from 1950 to 1960. It was in 195 1 that he became Minister for External Affairs and he held the post until his retirement. Looking ahead as always, he worked to establish a new set of relationships with the countries of our region. His permanent head at the time has recently recorded that Lord Casey’s statements during his visit to Japan in 1 95 1 marked the first real movement from enmity to close co-operation between Australia and Japan. He appreciated the great significance of Australia’s location close to the new states emerging in Asia and moved rapidly to expand our representation in the region. Earlier than most, he foresaw the importance of bringing China into the international community. He was always a realist about the world and never feared to see facts as they were. His advice was wise, his judgment sound.
Lord Casey’s career showed that deep patriotism could be combined with an outward-looking and humane international perspective. In 1965 he assumed a post for which he was superbly equipped- the Governor-Generalship. He had much of value to say. He used the position to dignify Australia and to symbolise the standards of public and private behaviour we all should strive to achieve. In his life he was assisted at all times by his wife, Lady Casey- a remarkable woman in her own right. She was to him, in all of his careers, a great comfort and a point of courage. This was exemplified by her devoted action of daily attendance at his hospital bed after his serious motor accident in 1 974.
Richard Gardiner Casey upheld the highest standards of public life and in his private life was unfailingly generous and kindly. What he achieved he earned by his industry, his courage, his integrity and his humanity. He loved Australia, and because of his life we have a better sense of ourselves and what we can become. To Lady Casey and to her son and daughter I extend, on behalf of the Government, my deepest sympathy at the loss of a husband and a father. Australia has lost a devoted servant. I move:
That this House expresses its deep regret at the death on 1 7 June 1 976 of the Right Honourable Lord Casey, Baron of Berwick, Victoria, and of the City of Westminster, England, K.G., P.C, G.C.M.G., C.H., D.S.O., M.C., K.St.J., a former Governor-General of the Commonwealth of Australia from 1965 to 1969, a member of this House from 1931 to 1940 and from 1949 to 1960, and a Minister of the Crown from 1 935 to 1 940 and from 1 949 to 1 960; places on record its appreciation of his long and meritorious public service; and tenders its profound sympathy to his widow and family in their bereavement.
- Mr Speaker, I support the motion. Lord Casey was a man of the greatest distinction and the highest distinctions. He was the most far-sighted and accomplished Liberal Foreign Minister Australia has produced in the post-war era and one of the most eminent Australians of his generation. He had a greater international reputation than many British contemporaries. He was better known in imperial and global councils than many fellow Australians who were to rise to higher office in his own country. In 1969 the Queen made him a Knight of the Garter, the highest honour she can award on her own initiative and the most ancient secular honour still awarded in the world. He was the 936th knight in over 6 centuries.
He was a man of unquestionable integrity, high principle, singular urbanity and personal charm, with valuable gifts as a diplomat and politician. No criticism one could make of him, even on this occasion, can alter our judgment of him as a great Australian. Indeed, it would do slight service to the memory of a man of such attainment if the shortcomings of his career or any limitations in his vision or judgment were glossed over in perfunctory tributes. His career had 3 main phases- that of the war and post-war years, then as Foreign Minister and finally as Governor-General. The first prepared him for the second, and the third was a reward for the other two. His 4 years as Treasurer, his membership of the British War Cabinet and his war service as Governor of Bengal equipped him with an all-round experience of political and administrative office which was probably unrivalled in this country. If he seemed a trifle out of touch and a trifle out of place in the Australian Parliament, there was no denying his capacity or experience.
He was one of the first Australian statesmen to recognise the importance of Asia to Australia. His great achievement during his 9 years as Foreign Minister from 1951 to 1960 was to establish deep and lasting goodwill between Australia and Asian countries- a foundation of friendship which was happily to survive the stresses placed upon it throughout the 1960s and even, one fears, beyond. He had a regard, almost a love, for Asians which was free of sentimentality and rooted in a knowledge of their history and the diverse cultures of the region.
He was the most creative and farsighted of all the Liberals who have been responsible for foreign affairs. Even in the Cold War atmosphere of the 1950s, when the post of Foreign Minister ought to have brought out the worst in a man, he maintained a characteristic dignity and restraint. He at least shook hands with Chou En-lai at Geneva. He foresaw and strongly opposed the Anglo-French aggression against Egypt. He was years ahead of his fellow Australian conservatives in urging recognition of China. One’s chief regret must be that, for all the correctness and enlightenment of his views, there was something lacking in his ability to carry them through and embody them in national policy. The acute sense of lost opportunity one feels on reading his diaries was due perhaps to the realities of party politics in his day and the ascendancy of other more determined men around him. We must wonder what influence he might have brought to bear on the course of events and the tragic policy decisions that were to follow his departure from government.
Looking back, it is astonishing that not until 1965 could the Liberals bring themselves to appoint an Australian to the nation’s highest titular office. Lord Casey was the first Australian appointed Governor-General by the non-Labor parties. Labor governments had already appointed two, both of whom had filled the post with rectitude and distinction. When the Liberals did get around to choosing an Australian they opted for a party man. Lord Casey, like his successor, was transferred direct from a Liberal Cabinet to Yarralumla. But any misgivings this might have occasioned were rapidly removed by the qualities he brought to the office. He filled the post admirably. He received me many times as Leader of the Opposition. I was grateful for the courtesies he showed me then and I am grateful for the notes he sent me in succeeding years. He was a man singularly punctilious and courteous. I had been asked to write a review of his diaries. Some of my comments were somewhat sharp, but I received a handwritten note from him acknowledging many of the points and thanking me for the care with which I had reviewed his book.
He enjoyed the respect and affection of the whole community. For all that, however, his term as Governor-General was not entirely free of controversy. The choice of a successor to Prime Minister Holt in 1967 was a considerable test of his vice-regal judgment. The last person he called to Yarralumla was the Deputy Leader of the senior coalition partner. It is the only example of questionable vice-regal conduct in this country for which a precedent can be found in the actions of the monarch herself, for in 1963 the Queen chose Sir Alec Douglas-Home to succeed Mr Harold Macmillan when she might have chosen Mr R. A. Butler.
Lord Casey’s death removes one of the most colourful and distinguished Australians in our experience. He was one of the few engineersmaybe the only engineer- to be elected to this Parliament. He retained to the end of his life an expert acquaintance with and interest in all engineering, scientific and technical matters. There were many firsts to his credit- the first Australian overseas diplomat, liaison officer to London, Minister to Washington; the first Australian to serve as Minister in a British government; the first Australian to be a colonial governor; the first Commonwealth life peer. He had fought at Gallipoli. He became an audacious flyer. It is a career not likely to be repeated in our time for it belongs essentially to another age. Yet the best things about Lord Casey would be valued in any age and his achievements will be of lasting importance. He was above all and in the best sense of the word a man of fundamental and abiding decency.
On behalf of the Australian Labor Party I extend to Lady Casey- herself a figure of public distinction and high personal qualities- and to the members of her family our deep sympathy in the loss which they and the nation have sustained.
– On behalf of the National Country Party I should like to associate the members of that Party in the motion of condolence to the Lady Casey and to the family of the late Lord Casey. In his many distinctions and degrees, the contributions which the late Lord Casey made throughout his long and distinguished career were very effectively and publicly acknowledged. There were three particular life phases which those of us who knew him well saw and respected. The first was of course his career. In the career outlined by the Prime Minister (Mr Malcolm Fraser) and by the Leader of the Opposition (Mr E. G. Whitlam) this afternoon, there is an array of distinctions which fe.w in Australia have attained- as an engineer, as a soldier, as a politician, as a diplomat, as a Minister, as Governor of Bengal and finally, as Governor-General of Australia. He, of course, represented not just Australia but ordinary people in a way that few other Australians have been able to do.
But it was not just in his career that he achieved such distinction. I think that all of us who knew him as a citizen respected him as one who had a continuing interest in the community around him. In his correspondence with those of us with whom he was associated even in the slightest way, he demonstrated a continuing interest in the world around him even in retirement. He was a man who retained not only a personal interest but one which was significant in the depth of its understanding. So often, having made a statement or a commitment on behalf of the Government, I found- and I know many of my colleagues found- that we would receive a letter from the late Lord Casey commenting upon that decision, sometimes asking for the reasons for it or explaining that he had some alternative point of view, and perhaps presenting it for consideration.
I think it was the extent to which he, unlike so many others, maintained a diary that provided an opportunity to see something of that very important period of development of Australia at an intimate level. I certainly admired the way in which he recorded for posterity some of the events in which he was a principal party. He wrote of those events with a measure of” personal insight and understanding that few others enjoy. It is of course through his diaries that so many others are able to share in something of the achievement of his own personal life. So firstly in his career and then as a citizen he achieved great distinction.
Finally and most importantly I think we all remember him as a man. He and the Lady Maie represented one of the finest families with which I have personally been associated. They were very close to each other and whatever their activities, whether it was flying aeroplanes or driving fast cars or in the more personal and deeper things in their association in public life, they retained a companionship that I think is something upon which all of us might reflect and which might well serve as a continuing example to so many future generations of Australians. He was a man admired by all who knew him. They, as a couple- the Lady Maie and the late Lord Casey- set a fine example. It is with a deep feeling of humility that I, personally and on behalf of the National Country Party, should like to extend to the Lady Maie and her family our tribute to a great Australian and one whose loss will be sadly felt.
-Briefly, I should like to associate myself and the electorate I represent with the resolution moved by the Prime Minister (Mr Malcolm Fraser). Lord Casey entered this
Parliament first as the member for Corio in 1 93 1 , having defeated Arthur Lewis whose death preceded that of Lord Casey by about 12 months. He served the electorate of Corio well and I know that he is well thought of by those who remember his period as member for that electorate. He resigned in 1940 to take a diplomatic post and was succeeded by John Dedman who also died about 12 months ago. He was the first representative of the electorate of Corio to hold ministerial rank in this Parliament. The 2 members who succeeded him also rose to similar rank. His career was one at which most people would look in wonderment. In different circumstances he almost certainly would have served as Prime Minister. That he left the Parliament when he did most likely changed the course of Australia’s political history. I think it is fair to say that had he stayed he almost certainly would have been Prime Minister and in all probability the change of government in 1941 would not have taken place.
I associate myself with this motion. I think that in any era there are men who serve their nation in a manner which is unique and Lord Casey was one of those men.
-Mr Speaker, Lord Casey, Baron of Berwick, lived in the electorate of Holt, which I represent, and he too served 2 governments and 2 parliaments. He also served in the War Cabinet. I realise that the electors of Holt would like me to say on their behalf today that the loss of Lord Casey to the Australian Parliament, to this nation and to world affairs has been a tragedy. He was perhaps one of the greatest statesmen, ahead of his time, that the world has ever seen, and we were very fortunate, both here and in Westminster, to have a man with such foresight so shortly after the war. As he lived in the electorate of Holt, on behalf of the people of that electorate I would like to express to Lady Casey and her family our sense of loss and our respect for one of Australia’s finest and most famous men and certainly a world diplomat.
– I am going to transgress the normal forms of the House to pay a personal tribute to Lord Casey. I became a member of Parliament in 19SS, after a redistribution, to represent part of an electorate which Dick Casey had formerly represented. When I went into the electorate I found that there was an immense feeling of personal warmth for the man. I remember that soon after I was elected I said to him: ‘Sir, what shall I call you?’ He said to me: ‘Billy, when you feel comfortable to do so you will call me Dick ‘. It was not long before I did so because of the warmth of the man. He was a great Australian, but he was also a tremendous man.
Question resolved in the affirmative, honourable members standing in their places.
– I thank the House.
- Mr Speaker, honourable members will be saddened to know of the recent deaths of Thomas Louis Bull, O.B.E., a former Senator for the State of New South Wales, William Edward Aylett, a former Senator for the State of Tasmania, George Irvine Whiteside, a former Senator for the State of Queensland, and Laurence John Failes, a former member of this House for the electorate of Lawson.
Senator Bull had a deep personal understanding of the problems of the people who live in rural Australia. Through this understanding he was able to make a contribution of great value, not only to his work in this place, but also to the organisations and bodies on which he served. In the Senate Senator Bull was an active member of committees, joining the Senate Select Committee on the Container Method of Handling Cargoes in 1967 and serving on the Foreign Affairs Committee from 1965 to 1971. He became Chairman of the Senate Standing Committee on Primary and Secondary Industry and Trade. Senator Bull had a considerable knowledge of the workings of the Parliament and after serving as a Temporary Chairman of Committees for some time in 1969 he was elected Chairman of Committees and Deputy President of the Senate. Senator Bull left the Senate in 1971, but this in no way ended his involvement in public life. In 1973 he became Chairman of the Riverina Advisory Council and in 1974 Chairman of the New South Wales Pastures Protection Board Committee of Inquiry. Senator Bull is survived by his wife Jessie and 2 sons and 2 daughters. I am sure that all members will join me in extending sympathy to his family.
Senator William Edward Aylett was born in Tasmania in 1900. He died on 10 August this year. He left school in 1916 to work at Mount Bischoff tin mine on the west coast of Tasmania to help to support his family. Later he worked in the coal mining and timber industries in Victoria. He returned to Tasmania in 1925 where he became a farmer and became actively involved in the Labor movement. He was elected to the Senate in 1937. Senator Aylett served for many years as a Temporary Chairman of Committees. He was a member of the Joint House Committee, the Standing Committee on Regulations and Ordinances and the Parliamentary Standing Committee on Public Works. After leaving the Senate in 1965 he continued in public life, becoming President of the United Council of Progress Associations of the Gold Coast City from 1969 to 1970.
Former Senator Whiteside, who died on 27 July, was chosen by the Parliament of Queensland to represent that State in the Senate on 9 October 1962. He remained in the Senate until 29 November 1963. Before entering the Senate, former Senator Whiteside had a long record of service to the union movement and to the Australian Labor Party. His Party posts included the presidency of the Queensland Central Australian Labor Party Executive. He was a Queensland delegate to the Federal Australian Labor Party Executive and Chairman of the Labor Broadcasting Station Pty Ltd. In addition he was secretary of the Federated Engine Drivers and Firemen’s Association.
Laurence John Failes was elected to this chamber in 1949 as member for Lawson. I know that honourable members will be greatly saddened to hear of his death on 7 July. Like Senator Bull, he had a deep knowledge of rural affairs which he used to good effect during his long term in this House, retiring in 1 969. During his time as a member of this House he served on the Joint Parliamentary Committee on Foreign Affairs, was a member of the House Committee and was a Temporary Chairman of Committees from 18 February 1959. I am sure that all honourable members will join with me in extending sympathy to his family. I move:
That this House expresses its deep regret at the deaths of Thomas Louis Bull, O.B.E., a former senator for the State of New South Wales; William Edward Aylett, a former senator for the State of Tasmania; George Irvine Whiteside, a former senator for the State of Queensland; and Mr Laurence John Failes, a former member of this House for the electorate of Lawson; places on record its appreciation of their long and meritorious public service; and tenders its profound sympathy to their families in their bereavement.
– I support the motion. The Prime Minister (Mr Malcolm Fraser) has already given the details of the parliamentary service of our four former colleagues and also an indication of the range of interests which they had before they came into the Parliament, during their service and afterwards. He has thereby indicated the qualifications which made each of them in his way a valuable member of this Parliament. Very many people here would not have known some of the men concerned, because at the time Senators Aylett and Whiteside left the
Parliament only one in seven of the present members of the Senate and only one in five of the present members of the House of Representatives were in the Parliament. Senator Aylett served for 2 7 years, which is a very long period in parliamentary terms. Only the honourable member for Fremantle (Mr Beazley) and Senator O ‘Byrne of the present members of this Parliament have served longer.
Of the people mentioned in the motion, some were known well to honourable members; some were known only for a short time. I first met Laurie Failes, for instance, during the war at Gove- Nhulunbuy as it now is- when we were both serving in the Air Force. On subsequent occasions, of course, I was able to meet him in his electorate of Lawson, for which he was the first and only member. The electorate was created for him; it expired when he retired.
Senator Aylett was first elected to the Parliament in 1938. It was a remarkable year. Labor won five of the 6 Australian States in the Senate and Senator Aylett, it will be recalled, entered the Parliament together with Senators Amour, Armstrong, Arthur and Ashley and others whose names began with letters lower in the alphabet. Senator Whiteside was here for the shortest period- barely a year. He was appointed by the Parliament of Queensland to succeed a deceased Labor senator at a time when it was customary to fill casual Senate vacancies with persons of the same political party as that of the former senator. All our former colleagues served not only in the Parliament but also outside. My own colleagues have told me of the way they appreciated Senator Bull’s term, his actions and his conduct as Chairman of Committees and Deputy President of the Senate and as chairman of 2 committees and a colleague on other Senate committees. The sentiments which the Prime Minister has expressed on behalf of the House to the relatives of our former colleagues I am certain are supported by all members. Many of us were associated with them outside the Parliament. Some few of us, a minority, were associated with all of them. We mourn them and we sympathise with their relatives in their loss.
– I should like to associate the members of the National Country Party of Australia with the motion of condolence moved by the Prime Minister (Mr Malcolm Fraser). In particular I should like to express to the families of the late Senator Bull and the former member for Lawson, the late Mr Laurie Failes, my own personal sympathy. Both of these men, in then- association with my Party, had a long and continuing connection with the rural industries. Tom Bull championed a cause which I think in this Parliament is best known and expressed by the honourable member for Wakefield (Mr Kelly). Indeed, while a senator within the Parliament on many occasions he found himself in some opposition to the former Leader of my Party, the then Deputy Prime Minister and Minister for Trade and Industry, whose policies on tariff matters tended to be somewhat contrary to those which the late Senator Bull preferred. Senator Bull in fact, in his association with the grazing industry, first expressed concern about the extent to which there was a change in the structure of the Australian economy which export industries and those associated with them might find it hard to survive. Of course, on many occasions in the Parliament he gave voice to those concerns and in his attitudes and in his practice always upheld strongly support for the cause which he represented and in which he believed so strongly. To both his widow and his family I should like to extend my own personal sympathy.
Laurie Failes, the former member for Lawson and the only member for Lawson, as the Leader of the Opposition (Mr E. G. Whitlam) has stated- was another whose connection with the rural industries began his interest in politics. Through the war years he served with the Royal Australian Air Force. On coming out of the Air Force he felt concern at the direction of the economic policies of the government of the day. I am interested to hear that the electorate of Lawson was created for him. Of course, it was created by a Labor government and won by a member of the Country Party, Laurie Failes, and held by him throughout the time that that seat remained. Laurie Failes was a sheep farmer and wheat farmer. He was associated with the development of a part of our rural sector which again has come under some pressure in recent years. He was a forceful and vocal exponent of the cause of those he represented. On behalf of the members of my Party I extend deep sympathy to his widow and family.
Similarly, on behalf of the members of my Party I extend sympathy to the families of the former Senator Aylett and former Senator Whiteside. They were 2 men who, in their association with the Australian Labor Party and with the Parliament, represented effectively the causes in which they believed. During the term when they were members of this Parliament they spoke, of course, about those issues with which they were associated. To their families I extend my deepest sympathy and also express an understanding of the traumas that parliamentary life imposes on the families of all members of this place, irrespective of the parties to which they belong.
I think that motions of this sort give us an opportunity to say to those who, outside the Parliament, so often in our absence assist in meeting our electorate commitments how much we appreciate the way in which they carry that burden. In offering our condolences to the families of these former members of this Parliament, I think it is worth remembering those responsibilities, the way they are borne and, of course, the loneliness of frequent separation. In extending our condolences to the families of those who were former members, I think it is also worth expressing thanks to those of our own families who also bear those burdens.
-I should very much like to associate my electorate of Riverina with this motion and to be associated with it personally. I join with the Prime Minister (Mr Malcolm Fraser), the Leader of the Opposition (Mr E. G. Whitlam) and the Deputy Leader of the National Country Party (Mr Sinclair) in the fine tributes that have been made about the former senator, the late Tom Bull. I find difficulty in expressing adequately my thoughts as I have lost a special friend. In the circumstances, words will not properly convey my real feelings.
Tom Bull was a man of unquestioned integrity. He was a country man and knew the country extremely well. He loved the country and he loved his country. He was a man of God. He was a man who accepted responsibility and he was a man of principle. He was a man who contributed in countless ways to the community. He was, indeed, a leader in every sense of the word. I remember him and I thank him for his friendship, for his wise counsel and for his personal help. He nominated me for preselection by the National Country Party for the seat of Riverina. He was my campaign manager during the recent December 1975 election. I am the richer for having known him and I am indebted to him but, sadly, it is a debt that must now remain unpaid.
Tom Bull and I joked many times about the fact that we had both begun our formal education in a little country, one-teacher, 14-pupil school at a place called Gobbagaula. The school has long since been closed and demolished but I often think that if such schools could produce men like Tom Bull they must have been grand institutions.
Tom Bull was always a devoted husband and father. In a world of changing values his family was and is a shining example of all those good things we speak about whenever we refer to the family as the basic unit of society. He was happiest when home with his wife, his sons, his daughters and his beautiful grandchildren. It is because of this wonderful family unity and spirit that I know how much he will be missed by his loved ones. Narrandera, the Riverina and Australia have lost a great man. We are all poorer for his passing. I join with other honourable members in expressing sincere sympathy to his wife and family.
Question resolved in the affirmative, honourable members standing in their places.
Mr MALCOLM FRASER (Wannon-Prime Minister)- As a mark of respect I suggest that the sitting be suspended until 8 p.m.
– I am sure that course will meet with the approval of the House. The Chair will be resumed at 8 p.m.
Sitting suspended from 3 to 8 p.m.
Message from the Governor-General recommending appropriation for proposed expenditure announced.
Bill presented by Mr Lynch, and read a first time.
In doing so, I present the Budget for 1 976-77.
When this Government was elected on 13 December last, Australia was in bad shape.
Inflation was out of hand, economic activity was falling again and unemployment had risen to record levels.
The Government immediately set about the enormous task of repairing the damage and restoring confidence.
Recovery is now getting under way.
The private sector is growing again and confidence is gradually returning.
This Budget will aid that recovery and rebuild confidence further.
It will do so in part by putting an end to permissiveness in government spending and turning back the recent trend towards bigger and bigger government.
At the same time it will build further on the social reforms of 20 May so as to assist the most needy in our community.
It is a Budget for confidence; it is also a Budget for reform.
When this Government came to office, Australia was still locked in its most serious postwar recession.
That quite unnecessary calamity was the product of three years of Labor Government.
The major distortions which that Government imparted to the economy in 1974 and 1975 had become deep-rooted obstacles to a return to full employment.
The economy had been shaken to its foundations.
The unfolding of economic conditions over the past eighteen months or so is detailed in Statement No. 2 attached to this Speech.
Here I mention only a few facts.
They are facts which clearly bring out the huge gulf which had opened up, by the time we came to office, between conditions in the economy that all Australians are entitled to expect and conditions as we actually found them.
At the end of 1975, the private sector was employing no more people than it had been three years earlier, although over that period the labour force had expanded by about 370 000.
Unemployment had risen to a level unheard of in this country since the Depression of the 1 930s.
Gross non-farm product in the December quarter, seasonally adjusted and at constant prices, was still almost 5 per cent below its peak level recorded two years earlier.
The farm sector was in a state of collapse.
The share of company profits in national income- one of the flywheels of our whole economic system- remained depressed at around three-quarters of its long-run norm.
Real business fixed investment fell in the December quarter to its lowest level for almost three years.
The Consumer Price Index in the December quarter was 14.0 per cent above a year earlier.
Above all, inflation showed no real prospect of a sustained move down.
This was the economic legacy which we inherited.
The human reflection of these dry economic facts was to be seen in the devastation of the lives of ordinary people which those events had wrought.
I mention as one instance the catastrophic impact which the careering inflation of those three years has had upon the lives of hundreds of thousands of people who had thought that savings accumulated by the thrift and industry of their working lives would help to protect their later years; and who now find the real value of those savings cut to ribbons by the great inflation which the Government of that day induced and over which it so wantonly presided.
I mention also the personal tragedies of school-leavers and other young people, and of disadvantaged groups in the community such as Aborigines, who have been denied jobs by the policies of those three years.
Given this economic legacy there could be no rapid return to normality.
On the contrary, restoring the economy was certain to be a protracted task.
Before the election we said it would take a full three-year term.
The Government quickly put in hand a coherent strategy involving all the main arms of economic policy.
Initial measures to control government expenditures were taken as early as December and followed up by further measures in February.
Meanwhile, in January, major monetary measures were undertaken to drain off some part of the excessive liquidity build-up of 1 975.
Since that time, especially during the seasonally tight June quarter, monetary policy has been operated flexibly- but always with a view to bearing down against current inflationary pressures while maintaining the cap.cacity of the financial system to underwrite recovery in the private sector.
We had earlier made clear that, contrary to views in some quarters, we had no intention of depreciating the exchange rate for the Australian dollar.
In February the Commonwealth sought to bring home to the Conciliation and Arbitration Commission that full wage indexation, by locking the economy into double digit inflation and a disaster level of business profitability, ran completely counter to hopes of a sustained economic recovery and a return to full employment.
This fundamental truth was initially not widely understood.
Since then, however, it has increasingly gained understanding and acceptance in the community.
The full scale review of expenditures which, at the outset, we had put in hand culminated in my statement on Fiscal Policy Decisions of 20 May.
In that statement I announced a sharp reduction in the rate of growth of expenditures previously in prospect for 1 976-77.
At the same time I announced the introduction of full personal tax indexation and significant improvements in the manner of assisting families and to Medibank.
As we have stressed from the outset, we have made our first priority the absolute necessity to combat inflation.
We have done so not merely because of the direct hardships that inflation obviously brings, but because unless we can brake inflation we shall not succeed in restoring full employment.
Against that background, I come to the present situation.
The economy is now showing signs of progress.
Typical of the early recovery stage in the economic cycle, the areas of strength are still scattered.
Much of the early impetus to recovery has come from a cessation of the stock rundown which had continued heavily throughout 1975, and from continued strengthening in exports.
More recently however, private consumption expenditure has begun to grow.
In the business sector also there are early signs of confidence regenerating.
Some healthy gains in capital spending on plant and equipment have already occurred.
The key question hanging over the future course of the recovery is whether the main components of private demand- consumption and business investment- will firmly join stocks and exports in building a continuing recovery.
If they do not, that recovery will falter and expire.
Another key question concerns the extent to which the growth in demand will be met from imports and so not be translated into local production and local jobs.
The recovery will be threatened if rising demand is associated with a too strongly rising tendency to import.
The need to qualify answers to these questions indicates that the economy still lacks a fully assured foundation for recovery.
When one asks, why should that be, there is a very simple answer.
It is so because both the key questions I have mentioned depend for their outcome on the future of inflation in this country.
Consumers will step up their spending and cut back on their savings only if they judge inflation to be declining.
Businessmen will emerge further from their shell-holes and start buying plant, equipment and new buildings, re-stocking and taking on new workers only if the uncertainty wrought by runaway inflation can be removed from their calculations and profits again begin to represent a reasonable rate of return.
The prospective threat to the recovery from import competition will only be banished if Australia’s international competitiveness does not continue to be eroded for too much longer by cost escalation in excess of that of our trading partners.
Each of these provisos points unequivocally to the fundamental needs to reduce inflation and, as an integral part of that process, to rectify the wage-profit distortion which the wages explosion of 1974 produced.
These objectives are fundamental to recovery.
There have been some favourable developments on the inflation front in recent months.
The 5.6 per cent rise in the Consumer Price Index in the first half of 1976 represented some advance on the 6.4 per cent and the 7.2 per cent in the second and first halves, respectively, of 1975.
The Arbitration Commission’s decision of May and August in respect of wage adjustments for the Consumer Price Index movements in the first two quarters of 1976 hold out hopes for some further moderation of inflation in the remainder of the year.
Meanwhile, the previously very depressed level- though not yet the share- of aggregate profits has begun to pick up.
In these two respects we are moving in the right direction.
But we need to go much further- and we need to do so faster.
Time is of the essence for two reasons.
First, the sooner wages and profits return to a more normal relativity, the sooner job prospects will improve.
On the more pessimistic assumption, the downward adjustment in the wage share that is now required would occur slowly via an unacceptably high level of unemployment persisting for a long period.
The same adjustment can take place much more quickly, and with much less cost in terms of idle resources and production foregone, if the determinations of wage fixing authorities continue to eschew the full indexation of wages for past price increases and wage moderation prevails.
This is the course the Government has been urging before the Conciliation and Arbitration Commission.
The second reason why we need to get inflation down more quickly is in order to stop exporting jobs.
In short, when we come to examine each of our current economic problems we find that all of them have their genesis in the inflationary experience of recent years.
There is no way in which those problems can be solved other than by dealing with inflation itself.
That is the key to it all.
Consistent with that view, this Budget is therefore an essential element in our anti-inflationary strategy.
First, the Budget takes its place in the on-going process of imposing more effective control on Commonwealth outlays generally.
Restraint on Budget outlays and on the size of the public sector is necessary to allow and to foster that expansion of the private sector to which we are committed.
Secondly, through the full indexation of personal income taxation which I announced on 20 May, we are putting in place some of our proposed reforms.
What these will mean is that the revenue side of fiscal policy will also be working to reinforce wage restraint, to strengthen company profitability and to boost business confidence.
Thirdly, the substantial reduction in the magnitude of the deficit since we came to office, and of which this Budget constitutes a further step, will help to moderate the flow of liquidity into the economy.
That is basic to achieving the monetary environment that is necessary if inflation is to be reduced.
I shall indicate later the monetary conditions which might be expected in 1976-77, given the Budget outcome and other relevant influences.
Of course, the very need for public sector restraint and tight control of the Budget deficitthe basic thrust of the Government’s fiscal and monetary policies- has been disputed by some.
Yet all the evidence- in Australia and overseasis that, under the kind of inflationary conditions which we have been and are still experiencing, fiscal and monetary policies of what used to be known as the ‘pump-priming’ kind no longer prime the pump but serve only to turn off the flow of jobs even further.
The reason is to be found in what I have already said.
It is inflation that is at the heart of the problem.
This Government yields to none in its concern for the genuinely unemployed.
– The honourable gentleman’s government put more people out of work in this country than any other government in Australia’s history. Honourable members opposite should not talk about unemployment in this debate.
– You are creating unemployment.
– The honourable gentleman might be unemployed even sooner than he thinks.
But, whether they know it or not, those who, in the name of reducing unemployment, call for higher government spending, or bigger deficits, or full wage indexation, or devaluation of the Australian dollar, are calling for higher- not lower- unemployment in this country.
The overwhelming weight of evidence is against such courses.
They have been tried both here and abroad; and they have failed.
Let me just mention here- for the case has been fully detailed elsewhere- that experience abroad strongly reinforces our conviction in these respects.
At this year’s Ministerial Council Meeting of the OECD, which I attended for Australia, the main industrialised nations of the nonCommunist world agreed on an economic strategy which had as its basic premise the view that: ‘. . . the steady economic growth needed to restore full employment and satisfy rising economic and social aspirations will not prove sustainable unless all Member countries make further progress towards eradicating
And I repeat, eradicating inflation.’
Consistent with that premise, OECD Ministers underlined the need for caution in the pursuit of expansionary policies and for firm use of fiscal and monetary policies to achieve the general economic climate required for non-inflationary growth.
As the Communiqué says: ‘. . . because of the virulence of recent inflationary experience, there is a danger that inflationary expectations could revive quite strongly if the pace of the recovery is too fast.’
Within that general context it was further agreed that: ‘. . . because of inadequate investment in past years in some countries and in certain basic industries, there is a risk of supply bottlenecks at a comparatively early stage of the recovery … In most countries, policies should be directed more towards promoting investment rather than consumption. In many cases, this will require an appropriate recovery of profits from the depressed levels of recent years. ‘
On that basis, action was seen as being required both to stimulate investment and to restrain the rise in public expenditure.
There could be no clearer demonstration of the appropriateness of the Government’s economic strategy.
I repeat- the speed with which we can restore full employment in Australia and ‘get Australia moving again’ on a sustainable basis will be directly related to the speed with which, in the words of the OECD Communique, we as a nation can ‘progress towards eradicating inflation’.
It follows that Australia would stand aloneand against the background of its internationally unfavourable inflation rate would be all the more noticeable for doing so- if we were once again to begin applying a clearly inappropriate ‘ pump-priming ‘ policy.
Whatever the virtues of such a policy may have been under conditions of stable prices, low unemployment and a smaller public sector, they have entirely evaporated under conditions of high inflation, high unemployment and a public sector already bloated beyond belief.
Having consistently rejected the ‘pumppriming’ expedient, however, the Government has not moved to the other extreme of trying to balance the Budget overnight.
Rather, this Budget applies the maximum degree of restraint judged to be consistent with promoting confidence and maintaing a steady path towards economic recovery.
By careful choice of the taxation measures to be announced tonight and those of 20 May, we have matched restraint in our own spending with confidence-strengthening measures to boost the private sector.
The way in which the various elements of the Budget slot into the anti-inflationary strategy highlights the importance of looking at all our policies- fiscal policy, monetary policy, wages policy and external policy- as a unified and coherent whole.
No single component of the strategy can fail without putting the basic objective under threat.
For example, a less firm fiscal stance would undermine the necessary degree of monetary control; or, alternatively, require a return to the kind of overly restrictive monetary policy which would inhibit recovery and the rebuilding of confidence.
A lax monetary environment would endanger wage and price deceleration.
A too stubborn adherence to the existing excessive level of real wages- for example, through full wage indexation- would continue to hold inflation high, depress consumer and business spending, hold back the creation of new jobs and prevent unemployment from falling.
Examples could be multiplied; but I simply say that our strategy is a coherent one.
All of its separate elements involve difficult decisions.
But the Government and all sections of the community must persist with the fundamental task.
In doing so, we can take comfort from two things.
First, we know that the alternatives have been tried and found wanting.
Secondly, although they are still limited, we are already beginning to see some positive results.
Budget outlays in 1976-77 are estimated to total $24,32 lm, an increase of 1 1.3 per cent over actual outlays in 1975-76.
In 1975-76 the increase was almost 23 per cent and in the year before that it was almost 46 per cent.
This marked slowing in the prospective rate of growth of Budget outlays in 1976-77 accords with the key role of expenditure restraint in the Government’s overall economic strategy to which I have referred.
Many of the provisions included in the Budget estimates flow from decisions announced in my comprehensive statement to the House on 20 May.
The references to individual provisions which follow are confined mainly to major items.
Full details are set out in Statement No. 3 attached to the Budget Speech.
Where appropriate, additional information will be announced by the Ministers concerned.
The decisions reflected in these expenditure pro visions are in line with the Government’s road priorities.
They reflect, for example, this Government’s philosophy that so far as possible responsibility for spending decisions should remain with private individuals and businesses, and not be assumed by governments.
More and more Australians are coming to understand that, one way or another, they must pay for the things they want.
This Government believes that Australians should have more scope to decide what they want
At the same time, these expenditure decisions reflect the Government’s main objectives to: promote confidence in the business sector; institute just social reforms in areas of need; and increase real levels of expenditure in those areas to which it gives priority.
For example, although the proposed increases in spending on education are less than some would like, this is an area where, notwithstanding our overall budgetary constraints, we have provided for increases in real levels of expenditure and restored triennial programs on a rolling basis.
In short, education for this Government is a high priority area.
In all, Commonwealth expenditure on education in 1976-77 is estimated at $2,204m, an increase of 15.3 per cent compared with 1 975-76.
Grants to universities, colleges of advanced education, technical colleges and government and non-government schools by the respective education Commissions account for $ 1,751m, or nearly 80 per cent of the total allocation for 1976-77.
In each case the budgetary provision represents a significant increase in real terms.
The Government has given to the education Commissions, for planning guidance only, minimum expenditure levels for 1978 and 1979 which will involve further increases in real terms.
As announced in my statement of 20 May, this planning guidance is: for universities, colleges and schools, 2 per cent growth in real terms per annum; and for technical and further education institutions, 5 per cent growth in real terms per annum.
The Budget also provides $2m for the Curriculum Development Centre and $ 1 . 1 m for research by the Education Research and Development Committee.
In addition the Commonwealth extends substantial assistance directly to students.
This Budget includes a total of $155m in 1976-77 for a range of student assistance schemes, including the Tertiary Education Assistance Scheme and programs of assistance for isolated children and Aboriginal children.
The Government is aware that many of these allowances have not been increased for some time; meanwhile, inflation has been proceeding.
Large numbers of students are involved.
It is not clear to us, however, that existing schemes are the most cost-effective, in terms of directing the substantial sums involved to the most needy and deserving students.
We have therefore initiated an urgent investigation into the adequacy of existing rates of benefit and the possible rationalisation of the schemes.
It will be recalled that full-time allowances under the National Employment and Training System were reviewed in February; payments in respect of in-plant and part-time training under that System are also now being similarly reviewed.
With respect to student assistance schemes, the Government’s decisions will be announced in October and implemented from the beginning of the 1977 academic year.
The investigation will also cover the question of the reintroduction of tertiary education fees for those classes of students mentioned in my statement of 20 May.
This does not of course involve reintroducing fees for Australian students undertaking their first degrees.
Another area in which this Budget provides for a large real increase in expenditures is Social Security and Welfare.
This is indeed the largest single component of Budget outlays.
In 1975-76 it amounted to over $5,000m or 23 per cent of total outlays.
The 1976-77 Budget provides for expenditure of $6, 1 87m, or about 25 per cent of total outlays.
The Government has already initiated major reforms in this area; some further reforms will be announced tonight.
The new scheme of family allowances- one of this country’s most significant social reforms- is now in operation.
Under the new arrangements, rates of family allowances have been substantially increased and the tax rebates for dependent children abolished.
The new arrangements will benefit, in particular, large families with low incomes: those in most need will derive most benefit.
Some 300 000 low income families- with 800 000 children- with incomes such that they previously derived no benefit- or less than full benefit- from the dependent children’s rebates, will benefit most.
This accords with the Government’s sense of priorities.
We are committed to protect pensions against inflation.
We will continue to honour that commitment.
In line with it we propose to introduce legislation to tie future pension and benefit adjustments automatically to movements in the Consumer Price Index.
The next two six-monthly increases, in line with movements in the Consumer Price Index, will come into effect in November 1 976 and May 1977.
Effective from the first payday in November the standard or single rate of social service pensions and benefits will be increased by $2.25 to $43.50 a week.
This reflects the movement in the Consumer Price Index between the December 1975 quarter and the June 1976 quarter.
The increase will apply in respect of age, invalid and repatriation service pensions, widows’ pensions and supporting mothers’ benefits.
The combined married rate will rise by $4.00 to $72.50 a week.
Similar increases will apply to unemployment, sickness and special benefits, sheltered employment allowances and tuberculosis allowances.
In line with the practice initiated by our predecessors, there will be no increase in single unemployment and sickness benefits payable to persons under the age of 1 8 years.
The increases are estimated to cost $190 million in 1976-77 and $508 million in a full year.
I come now to another significant reform.
Following a recommendation by the Income Security Review Committee, the Government has decided, with effect on pension payments after 1 1 November 1976, to abolish the separate property component in the means test for pensions.
Those pensions that are now subject to a means test based on a combination of income and property will in future be subject to a test on income only, including income from property.
It will be both simpler and more equitable to take into account for pension purposes the actual income received by a pensioner.
Many people will gain from this overdue reform.
It has been clearly inequitable that pensioners should have been means-tested on the basis of a notional return on property, even though in many cases their actual income from such property fell well short of that notional return.
We believe therefore that this measure will be welcomed by all.
Transitional arrangements will ensure that no existing pensioner will suffer a reduction in pension as a result of the change; these arrangements are estimated to cost about $7m in 1976-77.
The main Repatriation pensions also will be increased in November 1976 and May 1977 in line with increases in the Consumer Price Index.
The increases are estimated to cost $ 15.8m in 1976-77 and $38.8m in a full year.
Along with the proposed changes to the Social Security legislation, we will be introducing legislation to increase automatically the main Repatriation pensions.
The Minister for Repatriation will be announcing further details.
The Government attaches high priority to the provision of adequate facilities and care for handicapped people.
Under the Handicapped Persons Assistance program funds are provided to help voluntary organisations establish and operate sheltered workshops, activity therapy centres and training centres, and to provide accommodation for handicapped children and adults.
We propose to increase expenditure on this program substantially over the next three years.
This Budget provides a total of $30m for these purposes.
– The honourable gentleman should wait until I have read another paragraph or two. He might be better edified. The $30m comprises $27m for continuing commitments and $3m for new projects.
In 1977-78 the total amount will be increased so as to provide not only for continuing commitments but also $ 10m for new projects.
In 1978-79 the planned provision for new projects will be doubled to $20m in addition to providing for continuing commitments.
DrKlugman-What about 1984?
– I will talk to the honourable gentleman about that later. I will be able to talk about 1984, which is more than he will be able to do in this Parliament.
In all, over these three years we shall be providing a total of $ 12 lm under this program.
Arrangements will also be made so that selected organisations will be able to commence the planning and construction of approved projects now, in the firm knowledge that government funds will be forthcoming at nominated dates over the next three years.
These arrangements parallel those already announced for aged persons homes and hostels under which up to $225m is to be made available over the next three years to provide urgently needed accommodation for about 15 000 aged people.
We have decided to increase substantially both the handicapped child’s allowance and the handicapped children’s benefit.
In recognition of the special financial problems that are involved in the care of handicapped children, the relative increase in benefits in this area outstrips that of any other area of the Budget.
We have demonstrated our concern for this real area of underprivilege by raising benefits sharply.
The handicapped child’s allowance will be increased from $ 10 to $ 1 5 a week and the handicapped children’s benefit, payable in respect of handicapped children in institutions, will be increased from $3.50 to $5.00 a day.
These increases, which will benefit about 2 1 000 children in these categories, will take effect from November and are estimated to cost an additional $3.8m in 1976-77.
We shall provide an amount of $4m for grants to approved senior citizens’ centres in 1976-77, and the same amount in each of the two succeeding financial years.
Notwithstanding the need to contain government spending, we are proposing to increase outlays from the Budget on overseas aid, excluding defence co-operation, to $400m in 1976-77; that is, by 14.6 per cent on 1975-76.
Of this total, $228. lm is allocated to Papua New Guinea, which continues to be the major recipient of Australian aid.
An estimated $26m will flow to Indonesia in 1976-77, being the first year of the new threeyear aid program of $86m to that country.
Full details of Australia’s overseas aid programs are set out in the accompanying Budget Paper, ‘Australia’s Official Development Assistance to Developing Countries 1976-77’.
In these uncertain times, the highest priority of any responsible Government must be national security.
Total outlays on defence activities in 1976-77 are estimated at $2, 178m, an increase of over 17 per cent compared with last year.
The present Government is determined to restore and maintain an adequate Australian defence capability.
This will require increases in defence expenditure over the years ahead, particularly for the more adequate equipment of the Defence Force.
A White Paper on Defence is to be issued during this Session and at that time the Minister for Defence will make a comprehensive statement on the Government’s defence policies.
The cost to the taxpayer of health care in Australia has rocketed in recent years.
Last year Commonwealth expenditure on health services amounted to about $2, 953m, including $ 1,637m on Medibank.
At $1,6 12m the Budget provision for Medibank in 1976-77 is slightly less than last year.
When allowance is made for the prepayment of $2 16m to the States at the end of June for hospital operating costs in the September quarter, the cost of Medibank this year is about $407m greater.
But for the modifications we have made, the increase in cost this year would have been much greater still.
Levy proceeds to be collected under the modified arrangements to come into effect on 1 October are estimated to offset the costs of Medibank by $25Om in 1976-77.
As part of the reform of Medibank, the Government will provide $37.5m in 1976-77 towards the deficits incurred by registered hospital insurance organisations- including Medibank Private Insurance- from the payment of benefits to high risk and chronically ill members.
In addition, $12m has been provided for a subsidy to registered hospital insurance organisations to reduce the cost for those Medibank levy payers who choose to take out basic hospitalonly insurance cover.
The subsidy is intended to ensure that the cost of such insurance generally will not be more than $2.60 a week for family cover.
The Government has also decided to make an advance of $ 10m in 1976-77 to Medibank Private Insurance for establishment purposes.
In line with the undertaking given by the previous Government we have provided $108m for payments to the States in 1976-77 for the development of public hospitals and related health care facilities.
A further $70m-compared with $54.3m last year- has been provided for payment of grants to States, local government authorities and other eligible organisations under the Community Health Program.
We have also made a number of increases in other items of health expenditures.
Commonwealth expenditure on medical research, including the special grants to the Hall and Florey Institutes, is estimated at $ 10.1m in 1976-77; expenditure in 1975-76 was $6.2m.
New arrangements for financial assistance to the Red Cross Society’s Blood Transfusion Service will result in an increase of $330,000 in the Commonwealth’s subsidy to the Service in 1976-77.
The provision for the Royal Flying Doctor Service in 1976-77 is increased by a special grant of $800,000 to $2m.
The Government is mindful of its election undertakings and is committed to promoting the welfare and well-being of Aboriginals.
Unlike our predecessors, however, we do not see the achievement of that objective as being simply a matter of injecting ever-increasing amounts of money into an ever-increasing complexity of insufficiently considered programs.
An increasing body of evidence has demonstrated the need to re-assess the efficacy of some of the approaches of the past.
In this re-assessment the Government will have the benefit of the recent Hay Report on the programs involved.
Meanwhile, and pending its consideration of that Report, the Government is providing in this Budget no less than $153m for programs of direct assistance to Aboriginals.
Although this is $33m less than expenditure in 1975-76, spending on many programs is being maintained at about the same levels as last year.
-And you ought to be ashamed of the waste and maladministration in that area.
– You are a bunch of racists.
– Order! The honourable member for Wills will withdraw that remark. We are in the middle of an important Budget Speech. I ask the honourable gentleman, who has served in the Parliament for 20 years, to understand that he should withdraw the imputation that was made.
– I rise to order.
– The honourable member for Corio will resume his seat. I ask the honourable member for Wills to withdraw what was said.
– I will withdraw the remark.
– I appreciate that.
– In the case of some programssuch as grants to Aboriginal Housing Associationsthe provisions in the Budget are to cover outstanding firm commitments, pending further reviews of the objectives, priorities and past administration of those programs.
In the light of those reviews additional funds will be provided.
As announced previously, advances totalling $375m- $ 10.4m more than was provided in 1975-76- will be available to the States for welfare housing in 1976-77.
The Government has decided in principle to undertake a housing allowance voucher experiment; $75,000 is provided in the Budget for the first phase of this initiative.
Should the experiment prove successful, implementation of such a program would give low income families the financial means to select their own rental accommodation on the open market.
It would provide a new mechanism to make welfare housing sensitive to the needs of the users rather than those of the planners.
It takes into account the view of the Commission of Inquiry into Poverty that the first principle in the provision of assistance to low income people is that assistance must be linked to the person and not to the house.
The Government has under way a comprehensive review of all major urban and regional development programs, including growth centres and decentralisation, land commissions, sewerage and urban rehabilitation.
Pending review of the appropriate role for the Commonwealth in relation to growth centres, the Budget provides sufficient funds to preserve the Commonwealth’s options in regard to AlburyWodonga (for which $15m is provided), Bathurst-Orange ($2m) and Macarthur ($2m).
Other community development programs provided for in the Budget include: $50m for the National Sewerage Program; $ 1 5. 1 m for land commissions; $ 10.3m for the acquisition of property, planning and site development in the Woolloomooloo Basin in Sydney; and $9.4m to assist with the construction of water treatment plants in the Adelaide area.
A total of $133m has been provided for the Australian Broadcasting Commission; this compares with $ 1 37m last year.
In his statement of 3 June the Prime Minister emphasised that the Government would seek to eliminate unnecessary expenditure on the arts in 1976-77, but maintain important and worthwhile programs.
The Australia Council has been allocated $23m this year, about the same amount as was provided in 1975-76.
Expenditure on construction and running costs of the National Gallery, and on acquisitions, is estimated at $9.3m in 1976-77 compared with $4.6m in 1975-76.
To meet existing commitments, about $llm has been provided by way of capital assistance for leisure facilities in the States, $5m more than was spent in 1 975-76.
The Commonwealth’s role in youth, sport and recreation programs is one of the matters to be examined by the Task Force that has been set up to examine welfare services and communitybased programs in the healthwelfarecommunity development area.
Pending the Government’s consideration of the Task Force report, the 1976-77 Budget provisions for youth, sport and recreation are being maintained at the amount- almost $ 1.2m- that is required to meet existing commitments.
The Australian Telecommunications Commission will undertake a capital program in 1976-77 which will require funds of $415m additional to those available from its own internal resources.
As already announced, $2 15m of this will be provided from the Budget; the Commission will seek the balance of $200m by borrowing on the local capital market.
Last year an amount of $392m was advanced to the Commission from the Budget.
The Australian Postal Commission’s operations in 1 975-76 yielded a surplus estimated at about $30m.
The Commission therefore expects to be able not only to finance its 1976-77 capital program entirely from internal sources but also to repay $3m advanced to it by the Commonwealth in 1975-76.
With effect from 1 September 1976, the fees payable by the licensees of commercial television stations are to be brought into line with the scale which, since 1973, has applied to commercial broadcasting stations.
The new fees are estimated to yield additional revenue of $624,000 in 1976-77 and make total revenue from fees sufficient to cover the annual operational and capital costs of the Australian Broadcasting Control Board.
Radiocommunication licences are also to be increased for some classes of users from thenpresent level of $ 12 a year to $20 a year.
The Minister will announce the details; I mention, however, that there will be no increases in fees payable by voluntary bodies such as life saving organisations and rural fire brigades.
These new fees will operate from 1 October and are estimated to increase revenue by $1.2m in 1 976-77 and $ 1 .6m in a full year.
The Government is concerned at the continuing high cost to the general public of providing airport and airways facilities.
The gap between revenue and expenditure in this area was about $77m in 1975-76.
To help reduce this gap, and as already announced, air navigation charges are to be increased by 15 per cent with effect from 1 December 1976.
The increase is expected to yield an additional $4m in revenue in 1976-77 and $8m in a full year.
We are also implementing economies which, without adverse effects on safety standards, will result in expenditure on civil aviation faculties and services in 1976-77 being lower, in real terms, than in 1975-76.
An amount of $60. 8m is being provided to subsidise expected operating losses of the Australian National Railways Commission.
These losses, which greatly concern Government, are being generated primarily by the Tasmanian and non-metropolitan South Australian railway systems transferred to the Commonwealth under the previous Government.
A further $36. lm is included to finance the capital program of the Australian National Railways Commission.
This amount includes provision to continue the construction of the standard gauge railway between Tarcoola and Alice Springs.
It also includes funds for essential capital works on the tasmanian railway system pending completion of the inquiry into that system that was announced in my statement of 20 May.
The separate provision of $2m for the Adelaide to Crystal Brook standard gauge railway project will meet current commitments, pending the findings of the independent committee of inquiry that will be reporting on that project.
The Australian Shipping Commission’s capital expenditure program for 1976-77 requires provision of $63.4m from the Budget.
This program relates essentially to the provision of terminals and the acquisition of vessels and seaborne equipment by the Australian National Line for use in coastal and overseas trades.
The subsidy for the operation of ‘Empress of Australia’ by the Australian National Line in its Bass Strait passenger service will be increased by $lm,to$2m,in 1976-77.
An amount of $ 16m is provided to meet the estimated cost in 1976-77 of the Tasmanian Freight Equalisation Scheme that has been introduced following the report of the Royal Commission into Transport to and from Tasmania.
The Government is increasing its financial assistance to the Australian Shippers’ Council from $90,000 to $120,000 for 1976-77.
Light dues levied on shipping to recover the cost of providing coastal navigation aids are to be increased from 3 1 cents per net registered ton per quarter to 35 cents from 1 October 1976.
This increase is expected to yield an additional $ 1.7m in 1976-77.
A separate levy on shipping of 1 cent per net registered ton per quarter has been collected to cover the cost of the national plan to combat pollution of the sea by oil.
An adequate working reserve has been built up and the Government has therefore decided to reduce this levy to 0.8 cents from 1 October 1976.
The Budget estimates include almost $65m in assistance to the States for urban public transport projects.
This amount includes $20m for payments which may be required in 1976-77 to meet the Commonwealth’s share of approved cost increases in respect of previously approved projects.
An amount of $433. 5m will be made available to the States for roads in 1 976-77.
This includes $35. 8m which will be made available in addition to the amounts appropriated under existing legislation.
An amount of $8m is to be provided to the States in 1976-77 for expenditure on approved planning and research projects in relation to roads and urban public transport.
The Government has accepted the Industries Assistance Commission’s recommendation to continue for a further year the joint Commonwealth/State Government scheme for the provision of concessional carry-on finance to beef producers.
The Commonwealth will match State approvals in 1976-77 on a dollar-for-dollar basis, subject to a limit of $ 1 5m on the Commonwealth Government contribution.
The Government has considered the report of the Industries Assistance Commission which recommended that the subsidy of $78.74 per tonne on the nitrogen content of nitrogenous fertilisers be phased out over three years.
The Government agrees in principle that this subsidy should be phased out and has decided that the rate should be reduced to $60 per tonne on 1 January 1977.
The subsidy is estimated to cost $12m in 1976-77.
The Rural Reconstruction Scheme, which expired on 30 June 1976, will be extended to 31 December 1976 pending finalisation of the Government’s consideration of the Industries Assistance Commission report.
Of the total of $2 7m provided for the Scheme in 1976-77, $10m relates to the proposed extension to 3 1 December 1 976; the remainder relates to commitments under applications approved prior to 30 June 1976.
An amount of $ 13.5m has been included to meet the Commonwealth’s estimated liability in respect of the Dairy Adjustment Program in 1976-77.
This is additional to other assistance the Government has offered to the dairy industry by way of underwriting of producers’ returns from skim milk powder, casein, butter and cheese, details of which have already been announced by the Minister for Primary Industry.
The Commonwealth has authorised the Australian Wool Corporation to increase the level of support provided under its minimum reserve price scheme to 234 cents per kilo clean on a whole clip average basis.
This is equivalent to 275 cents per kilo clean on the previous 2 1 micron basis.
Notwithstanding this increased level of support, it is expected that the Corporation will be able to repay in 1976-77 $245m of advances made by the Commonwealth to the Corporation in previous years.
The Government has decided to continue its support for the Commonwealth/State Water Resources Assessment Program for another three years; the provision for 1976-77 is $6.7m.
The Government is increasing, from $66,000 to $ 1 77,000, its support for programs designed to improve productivity at plant level.
An amount of $20m (including $3.7m for legal aid for the Aboriginal community) is included in the Budget for legal aid, compared with expenditure of $ 16.3m in 1975-76.
The Attorney-General is negotiating with the States with the object, of bringing all forms of legal aid under the control of statutory Legal Aid Commissions and thereby effecting savings in the administration of legal aid.
Pending completion of the negotiations, the Government is maintaining legal aid activities at their present level.
To help offset the sharp rise in costs of legal aid to the Commonwealth over recent years, new and increased fees will be levied in Federal Courts; these fees are estimated to yield $2. 5m this year and $3. 5m in a full year.
One of the topics to which, since taking office, the Government has accorded a very high priority is that of the financial relations between the Commonwealth, State and local governments.
The tax sharing scheme- the central element in our program of reform- is to a large extent now settled with the States.
Under Stage 1 of the scheme, the States will be entitled to 33.6 per cent of the Commonwealth’s personal income tax collections, excluding any special surcharges or rebates.
On present estimates, which are necessarily subject to a considerable margin of uncertainty, this puts the States’ entitlement for 1976-77 at $3,716m.
This would represent an increase of $643m, or about 2 1 per cent, over the comparable grants in 1975- 76, and is presently estimated to be $89m more than the States would have received under the old formula.
The State Governments’ Loan Council programs for 1976-77 will total $l,356m, an increase of 5 per cent compared with 1975-76.
Local government also will have an annual entitlement to a share of personal income tax.
An amount of $140m is to be provided in 1976- 77- an increase of 75 per cent over last year.
In recent years specific purpose payments to States and local government authorities have grown very fast; in 1974-75 the increase was no less than 92 per cent and in 1975-76 it was a further 34 per cent.
After adjustment for the hospital prepayments to the States in late June, specific purpose payments are presently estimated to increase by about 9 per cent in 1976-77.
Lumped together, net payments to States and local government authorities in 1976-77 are estimated to total $9,077m- an increase of 13 per cent after adjustment for the hospital prepayments.
If allowance is made also for the non-recurring payments made for unemployment relief in 1975-76, the increase in 1976-77 becomes 15 per cent.
This represents a significant increase in real terms and is a slightly faster increase than is in prospect for all other Budget outlays.
The greater part of the funds we are providing to the States is untied and can be used by the States in ways of their own choosing:
The States have always said they want greater freedom to make their own decisions and determine their own priorities.
That is why we have increased our provision to them of untied funds relatively more than funds for specific purposes.
The States now have the capacity to spend these untied funds in ways of their own choosing- be it welfare housing, or sewerage programs, or whatever it is to which they choose to give priority.
The State Governments, along with the Commonwealth, must play their part in the battle against inflation.
At a time when there are complaints about the level of funding of State Government programs the Commonwealth finds it particularly strange to find some State Governments actually supporting the even higher increases in their cost levels which full indexation of wages would bring.
There is a need for restraint in the expenditures of State Governments as well as m the expenditures of this Government.
The figures I have just given clearly show that the States are not being asked to bear any undue share of the task.
The Budget includes an amount of $26m for relief payments in 1976-77 following natural disasters.
This amount comprises continuing payments following floods and cyclones during 1975-76 and recently announced drought relief assistance to Western Australia.
The Government has also undertaken to support, in accordance with the natural disaster assistance arrangements with the States, expenditures by the Victorian Government on certain drought relief measures.
We have approved a total program of $293m for new works to be committed to construction in 1976-77.
A total cash allocation of $4 10m has been set for expenditure during the year on new and already committed projects; this compares with actual expenditure of $425m in 1975-76.
For the Darwin Reconstruction Commission a new works program of $50m and an expenditure figure of $140m have been determined; actual expenditure in 1 975-76 was $ 1 10m.
The approved new works program for the National Capital Development Commission is $153m, with a cash allocation of $195m compared with $ 188m in 1975-76.
For the remainder of the works program the limit on new works is $90m, including $50m for the Northern Territory, and the cash allocation is $75m; actual expenditure last year amounted to $127m.
The Minister for the Capital Territory has already announced details of increases in general municipal rates and in water and sewerage rates in the Australian Capital Territory.
Action is in hand to limit the subsidy to the Canberra bus service to $5.4m in 1 976-77.
There will be increased revenue from bus fares and paid parking spaces in Canberra.
The Minister will be issuing details.
Soon after taking office the present Government introduced new staff ceilings which were mainly responsible for reducing Commonwealth employment in the area covered by staff ceilings by 2.8 per cent in 1 975-76.
This compares with a growth in Commonwealth employment in the area concerned of about 4 per cent per annum in the three years to 1974-75.
On 14 June the Prime Minister announced a further overall reduction of 1.2 per cent in these staff ceilings to be achieved by 30 June 1 977.
This comprised a 1.6 per cent reduction in the ceilings for Public Service Act employees and a 0.9 per cent reduction in the ceilings for certain Commonwealth Government authorities.
These lower ceilings have been reflected in the detailed Budget estimates.
The Prime Minister indicated at the time that the 1976-77 ceilings set in June were provisional, being subject to further review and possible adjustment in the light particularly of the Government’s Budget decisions.
Following further consideration in the Budget context, the Government has decided upon an objective of achieving a further reduction of 2 per cent in staff ceilings for Public Service Act employees during 1976-77, making the objective in this area a 3.7 per cent reduction in all.
This further reduction is estimated to produce a saving to the Budget of about $22m in 1 976-77.
Accompanying- though lesser- reductions in the staff ceilings for certain Commonwealth Government authorities will mean that, after allowance for the reduction previously announced, the total reduction in ceilings now being aimed at during the course of 1976-77 amounts to 2.5 per cent.
The Government reaffirms its intention to achieve these reductions without sacking anyone and without creating personal hardship.
Following the change of Government we were able to keep total Budget outlays for 1975-76 within the original Budget estimates for the first time since 1968-69.
We aim to repeat that performance again in 1976-77.
We will not let up in our efforts to achieve savings and eliminate waste and inefficiencies wherever they occur.
Because so much expenditure tends to be committed before the year starts, effective expenditure control must begin at the stage of commitment.
To this end, new administrative arrangements have been developed for the regulation of forward expenditure commitments by departments and authorities which depend on the Budget for the whole or part of their finance.
Limits within which departments and relevant authorities may make commitments during the current financial year- but which are to be financed from appropriations in future years- were determined as part of the Budget process.
These limits can be increased only by specific Government decisions.
We see the development of these new administrative arrangements as making a major contribution to the improvement of overall financial management in the area of Commonwealth administration.
I turn now to the receipts side of the Budget.
Government spending cannot be massively increased as in recent years without also significantly increasing the overall tax burden.
This remains true notwithstanding the enormous deficits which have been allowed to open up between the outlays and the receipts side of the Budget- and which in due course have to be closed.
With that latter important qualification, it is also obvious that, by prudently reining in the rate of growth of government spending, it becomes possible not only to avoid further increases in the tax burden but also to contemplate reducing it.
In 1976-77, for the first time since the last Liberal-National Country Party Budget of August 1972, there will be no increases in the major indirect taxes.
I contrast this with the 1975-76 Budget proposals for indirect tax increases which- even excluding the coal export duty- represented additional levies totalling $602m in 1975-76 and $688m in a full year
Over the three years 1973-74 to 1975-76 the total of all the increases in taxation in this area lifted the annual level of taxation by over $ 1,000m.
In this Budget, I repeat, there are no proposals to increase excise on cigarettes, or on beer, or on spirits, or on petrol.
Moreover, because of our success to date in restraining expenditures, 1976-77 will see our first steps towards positively relieving the burden of taxation.
The decisions involved- those already announced and those I am about to announceaccord with our basic philosophy that individuals and businesses should have more say in spending decisions which concern them, and governments less.
At the same time they are intended to strengthen confidence among consumers and investors, and thereby advance the recovery of the economy.
The most important step in relieving the burden of taxation- the indexing of personal income tax- has already been taken and has been in operation for pay-as-you-earn purposes since 1 July.
It represents perhaps the most significant reform of the personal income tax system in our time, and certainly the most costly in terms of revenue forgone.
We have taken this step both in fulfilment of our objective of getting the Government’s hands out of taxpayers’ pockets, and for wage policy reasons.
Individuals, rightly in our view, attach considerable importance to their own command over their incomes and their ability so far as possible to spend those incomes as they see fit.
The indexation arrangements which are now part of the income tax law will prevent the automatic increase in effective tax rates which used to come about as rising money incomes resulting purely from inflation took taxpayers further up the progressive rate scale.
The law now provides for annual adjustments to prevent that.
A change to the law will now be needed if a government seeks to increase effective real rates.
This brake upon financial profligacy is a major step towards ‘keeping governments honest’ with their taxpayers.
The new arrangements are described in Statement No. 4 attached to this Speech.
The cost of indexation and the changes associated with it is estimated to be $ 1,050m in 1 976-77 and $ 1 ,2 10m in a full year.
We gave a commitment for 3 years; we fulfilled it in just under 6 months.
The Government made it quite clear in its election policy statements that it was not prepared to see inflation continue to add to the tax burdens of individuals and businesses.
We allowed ourselves a period of three years to give full effect to the necessary remedial legislation.
So far as personal income tax is concerned, we have already fulfilled our undertaking by indexing the system as from 1 July 1976.
We have now considered relieving businesses also from the impact of inflation on their tax burdens.
In the kind of highly inflationary situation which Australia has recently been experiencing, firms have serious problems in financing the rapidly growing costs of an adequate and appropriate level of trading stocks.
They have problems, too, with financing the soaring costs of replacing plant and equipment when depreciation allowances for taxation purposes are based on historical costs.
Since coming to office the Government has given careful thought to the most effective ways of providing relief to firms beset with problems of these kinds arising from our recent high rates of inflation.
In doing so it has had the benefit of the views originally stated by the Mathews Committee and, more recently, by Professor Mathews personally.
It has also sought and received the views of leading representatives of the accountancy profession and of a wide sweep of industry interests.
The Government has now decided to take a substantial step in relation to a system of trading stock valuation adjustments applying to taxable incomes earned in the 1976-77 income year.
Meanwhile, we are continuing to examine the impact of inflation on depreciation allowances and other aspects of business financing and profitability, with a view to bringing in appropriate legislation within the Government’s current term of office and having regard to the availability, in the meantime, of the investment allowance.
The key features of the proposed system of trading stock valuation adjustments will be:
The adjustments will reduce taxable incomes in respect of income year 1 976-77.
On practical grounds, the accent of the scheme will be, so far as possible, on simplicity.
With that in mind, we propose the use of a general index for calculating the trading stock valuation adjustment.
Specifically, the cost of a firm’s trading stock as at 1 July 1 976 will be revalued for income tax purposes by reference to the percentage increase in the ‘goods’ component of the Consumer Price Index between the June quarter of 1976 and the June quarter of 1977.
It is not proposed to bring the adjustments back into assessable income in later years in the circumstances proposed by the Mathews Committee- the adjustments will reduce tax, not defer it; in terms of the jargon, there will be no ‘clawback”.
It will be necessary to lay down some safeguards against misuse of the system to avoid tax that ought to be paid; the precise nature of these is at present under consideration.
By way of illustration I mention that, had such a scheme been operating fully in the current year on the basis of 1975-76 incomes, it is estimated that the cost to revenue this year would have been of the order of $700m.
What the full cost of the final scheme would be in 1977-78 cannot of course be foreseen at this stage.
That would depend among other things upon the rate of increase in the index during the current year.
We have said that the scheme would be phased in.
At this point it is clearly not possible for us to say how far, by this time next year, we shall feel able to go.
We shall go as far as we can.
What we do now undertake is that 50 per cent of the full adjustment will be allowed next year as deductions from 1 976-77 incomes.
There are other aspects of the system of adjustments which require further study and which we are therefore not in a position to announce at present; these include, for example, the safeguards I have referred to and the categories of trading stocks to be included in the scheme.
Legislation to be introduced in the next Autumn Sittings will provide full details.
In settling those details, the Government will have discussions with professional and industry groups where appropriate.
The Government has undertaken to ease the distribution requirements for private companies under Division 7 of the Income Tax Assessment Act.
In this regard we have had the needs of small businesses particularly in mind. We believe in small businesses: They are essentially Australian.
We attach importance to the spirit of free enterprise which small business symbolises.
For distributions in respect of taxable incomes of the year 1975-76 and subsequent years the retention allowance for trading or business income will be increased from 50 per cent to 60 per cent.
This will increase by one-fifth the amount of after-tax income which a private company can retain without incurring Division 7 tax.
No change is being made to the 10 per cent retention allowance for property income or to the rule that there be no retention allowance for dividends that one private company receives from another.
At the same time, the law will be amended to terminate the ‘excess distribution’ provisions of Division 7, which permit a company which makes more than the minimum distribution in one year to make less than a minimum distribution in a later year without incurring Division 7 tax.
With the proposed increase in the retention allowances there will no longer be any practical need to retain these highly complex provisions, which have also been of some concern in connection with schemes of tax avoidance; they are accordingly to be withdrawn subject to appropriate transitional arrangements.
The increase in the retention allowance is estimated to cost about $lm in 1976-77 and $30m in a full year.
The Government has had under consideration the report of the Industries Assistance Commission on the income tax arrangements applying to the mining and petroleum industries.
In the light of that report it has decided on certain amendments to the law, bearing in mind both the Goverment’s desire to see a healthy and efficient mining sector and the IAC’s observations on the desirable relationships between the levels of tax on income from mining and on income from other business sources.
The changes proposed are:
Petroleum exploration expenditure and allowable capital expenditure on the mining of petroleum will be deductible against income from any source.
Allowable capital expenditure of any mining company on the development of a mine or field will be deductible on a diminishing value basis, as at present, by reference to a maximum life of mine or field of 5 years, instead of 25 years as at present.
Allowable capital expenditure on facilities used for the transportation of minerals, including petroleum, will now be deductible on a straight line basis over either 20 years, as at present, or 10 years, at the taxpayer’s option to be exercised with the first claim for the deduction.
The categories of expenditure covered by the present provisions giving deductions for allowable capital expenditure on mineral transport facilities will be extended to cover expenditure, presently not deductible, on port development such as harbour surveys, initial dredging, navigational aids and breakwaters.
The amendments will apply first to capital expenditures incurred after today.
They have no cost in 1976-77 but the revenue to be forgone in the first full year is estimated at $60m.
In the last Budget an excise of $2 per barrel was introduced on the production of crude oil, condensate and naturally occurring liquefied petroleum gas.
Under existing policy any company discovering oil would receive import parity less the production excise.
Many oil exploration companies have put to us that costs are so high today as to make commercial production from new oil discoveries of the size likely to be found in Australia unattractive at this level of return.
The Government accepts that the levy represents a substantial deterrent to companies considering exploration for new fields.
It has therefore decided that oil from discoveries after today will be free from the production excise.
The result will be that all production of crude oil from future discoveries will receive full import parity at the nearest refinery port.
The Government believes that this will significantly affect the level of activity within the oil exploraton industry.
The coal export duty introduced in the last Budget applies at two rates- $6 per tonne for high quality coal and $2 per tonne for other coal, apart from certain lower grade coal which is exempt.
The Government has always regarded this as an entirely inappropriate form of tax.
The quality of deposits varies markedly, but within and between the two categories which are subject to duty the effects of the duty fall in a quite haphazard manner.
Marginal fields pay the same rate of duty as economically more profitable fields, or in some cases more.
The imposition of this levy has had undesirable effects both on existing producers and on potential developments.
It is the intention of the Government to remove this particular levy, but for budgetary reasons which will, I think, be obvious it is not possible to remove it at one stroke.
It will however be reduced immediately, in what the Government regards as a first step towards completely phasing out this particular tax within three years.
The Government is taking these steps towards phasing out this levy to encourage the healthy development of the industry.
If the States take advantage of this situation to increase their own royalties the Government will have to review its position.
So far as immediate steps are concerned, the Government will remove the duty from noncoking coal and will reduce the rates on coking coals by 25 per cent- from $6 to $4.50 per tonne in the case of the higher rate of duty and from $2 to $ 1 .50 per tonne in the case of the lower rate.
These changes, to apply immediately, will cost an estimated $33m in 1976-77 and $37m in a full year.
Legislation to introduce an investment allowance was passed in the Autumn Sittings of the Parliament.
During those Sittings and since, representations were received on a number of aspects of the allowance on which changes in the law were sought.
In the course of its deliberations on the Budget the Government has carefully considered all of these representations and having done so has decided that the present scope of the allowance should remain unchanged.
The present level of the exemption from payroll tax in the Australian Capital Territory and the Northern Territory is to be increased to the level recently adopted by the States.
The present exemption of $20,800 will become $41,600 per annum; above $41,600 the exemption will phase out by $2 for every $3 by which the annual payroll exceeds that amount.
The new exemption will apply from 1 January 1977.
The change does not have any significant effect on Budget revenue.
The Government has now considered the IAC report on ‘Rural Income Fluctuations- Certain
Taxation Measures’, which dealt with two broad questions: the averaging arrangements for primary producers, and a proposal for a scheme of income equalisation deposits for primary producers.
The Government has decided to continue the averaging system in its present form, but will take up the proposal for a scheme of income equalisation deposits.
Commencing with income year 1975-76, deposits lodged with the Government under the latter scheme will be deducted from the assessable income of the year of income in respect of which they are lodged, and included in assessable income of the year in which they are withdrawn.
The scheme will enable primary producers to act themselves to even out the effects of fluctuating income on their tax liabilities over a period of years.
Details of the scheme will be available when the legislation is introduced; the scheme will, however, include the following features:
A minimum limit of $100 and a maximum limit of $ 100,000 is to be applied to the total value of a taxpayer’s holdings.
It will not be possible to withdraw deposits within the first 12 months after lodgment (other than in exceptional circumstances such as natural disasters, death, or financial stringency); however, there will be no maximum limit on the period for which an amount may be left on deposit.
The scheme will apply to primary producers, but in determining taxable income’ from which deposits may be purchased, no distinction will be drawn between income obtained by primary producers from farm or non-farm sources.
Interest is to be paid on the deposits at a rate, initially 5 per cent per annum, to be prescribed by regulation.
The present Drought Bonds Scheme is to be discontinued under appropriate transitional arrangments.
Present holders of Drought Bonds will be offered the option of transferring to the new scheme.
It is estimated that the revenue forgone in 1976-77 will be about $2m; the full-year cost of the scheme cannot be estimated at this stage.
We undertook to increase the exemption from estate duty where the whole or part of the estate of a deceased person passes to a surviving spouse.
This is an area of the law where personal tragedies abound.
Even in current tight budgetary circumstances we have seen the need to pay special regard to rectifying the present situation.
We shall therefore fulfil our undertaking in this Budget.
We shall introduce a special deduction to apply where an interest in an estate passes to a surviving spouse.
The deduction will be $50,000, or the entire net value of the spouse’s interest in the estate if that is less than $50,000.
The existing statutory exemptions, and the rebate of part of the duty in respect of a primary producer estate, will then apply as at present to the remainder of the estate.
With the introduction of this special deduction, the deduction introduced in 1974 for an interest in the matrimonial home passing to a surviving spouse will be terminated.
This was in any case an unsatisfactory provision, as it discriminated between different types of assets and was available in full only if the gross value of the interest in the home did not exceed $35,000.
The new deduction will apply regardless of the nature of the assets and will not be reduced where the value of the relevant interest exceeds $50,000.
In the case of an estate passing wholly to a surviving spouse, no duty will now be payable on an estate up to $90,000 (or $98,000 for primary producer estates).
About 20 per cent of presently dutiable estates will cease to be dutiable, and the impact of duty on larger estates will be considerably reduced.
The new provisions will apply to estates of persons who die after today.
The cost of this measure is estimated to be $2m in 1 976-77 and $ 1 4m in a full year.
In the aggregate, outlays in 1976-77 are estimated to increase by 11.3 per cent to $24,32 lm.
Receipts are estimated to increase by 18.8 per cent to $2 1,7 13m.
The overall deficit is therefore $2,608m.
This is $977m less than the actual deficit of $3,585m in 1975-76.
This latter figure would of course have been much greater had it not been for the actions taken by this Government immediately it came to office.
When allowance is made for overseas transactions, the domestic deficit in 1976-77 is estimated at $l,879m; this is over $l,000m less than the domestic deficit of $2,905m last year.
For all the reasons I have stated earlier this hauling in of the deficit this year is appropriate.
But, over and beyond that, it can fairly be claimed that the deficit in prospect for 1976-77 differs in important respects from those of 1975-76 and 1974-75.
The ‘mix’ of the prospective deficit this year is vitally different from those of the last two years.
It is particularly striking, for example, that the lower deficit in prospect for 1 976-77 is estimated to come about after forgoing revenue of no less than $ 1 ,250m on account of personal tax indexation and the investment allowance.
Had we not chosen to make those desirable reductions in the burden of personal and corporate taxation the deficit would have been about $ 1,360m and the domestic deficit would have been down to around $630m.
Not only is the reduction in the deficit appropriate to the evolving economic recovery but it is also being achieved after a major reduction in taxes which will play its own part in enhancing that recovery.
More generally, this Budget reflects the Government’s determination to press on with the major social, economic and administrative reforms that were outlined by the Prime Minister last November.
It continues the drive to restore to individuals the economic independence that was so markedly eroded by the policies of our predecessors.
It puts people first.
It points towards the re-enhancement of the role of the private sector and away from the threat of big government.
It emphasises the importance of free enterprise.
For the first time in recent years, it gives real incentive for individuals and companies to venture and to succeed.
Against that background, I believe there will be general agreement that this Budget is above all a fiscally responsible one.
Among other things it represents another step towards a better ‘mix’ of fiscal and monetary policies than has existed in recent years.
The joint thrust of this Government’s fiscal and monetary policies to date has slowed the growth in the monetary aggregates in recent months from the grossly excessive rates of 1 975.
This Budget stays firmly on that track.
The reduction we are effecting in the Budget deficit will reduce the Government’s call on financing from the community.
It thereby provides more scope for maintaining financial conditions appropriate to continuing recovery in the private sector while holding growth in the overall monetary aggregates at appropriate rates.
Thus, the technical estimates at the moment suggest that with the monetary regulators at settings appropriate to continuing recovery in the private sector, a Budget outcome of the kind foreshadowed here, along with other factors affecting the financial system, could be consistent with growth in the broadly defined volume of money (M3) in the 10-12 per cent range during 1976-77.
That range, which is subject to the usual hazards of forecasting, will no doubt change as circumstances unfold.
Depending upon those circumstances it could also be necessary and appropriate for policy to be adjusted in the light of events as they develop.
As of now, however, it gives a broad indication that growth in the monetary aggregates will be a notch or so lower than last year.
The Government believes that, notwithstanding all the qualifications which necessarily attach to it, this broad indication of the monetary outlook will provide the private sector with a greater degree of certainty regarding that aspect of policy in the year ahead than it has previously enjoyed- particularly in recent years.
It should help, for example, to allay fears of either excessive financial tightness or financial ease.
Consistent with the aims of government policy, an outcome along these lines would contribute to reducing inflation while ensuring adequate funds to underwrite economic recovery.
Within that broad monetary framework, the decisions of the wage-fixing authorities will be crucial to the speed of the wind-down in inflation that, one way or another, must be achieved.
Provided there is significantly less than full flow-on of price increases to wages, an improvement of several percentage points in price performance, and a somewhat greater deceleration in money wages, can be had in 1976-77 as a whole.
By the end of the period, we should be down to single digit rates.
With some productivity gains accruing in the upturn, a noticeable rise in the profit share would then be in prospect.
With such a gradual winding-down of inflation and inflationary expectations, recovery in demand and activity would be unlikely to proceed at more than a modest pace.
Under those circumstances, both private consumption expenditure and business investment should, during 1976-77, become established as sources of continuing growth in demand for domestic production.
Over the year as a whole they should, on that basis, record moderate increases in real terms.
Unhappily, seasonal conditions appear likely to permit little if any increase in farm production overall; however, developments along the lines I have mentioned could reasonably be expected to result in gross non-farm product growing by about 4 per cent for the year as a whole.
Given a more widespread recognition, on the part of all those principally concerned, of the central role which current rates of inflation are playing in holding back the recovery and keeping unemployment high, it is possible to envisage a more optimistic scenario.
But until the evidence of that more widespread recognition comes up on the board- for example, in the determinations of the wage-fixing tribunals and in the co-operation with those decisions of the trade union leadership as a whole- we cannot plan on that.
Even the more gradual recovery prospects, however, would be consistent, after allowance for labour force and productivity growth, with some gradual reduction in unemployment during the course of 1976-77.
It would be rash to predict any earlier reduction in unemployment; movements in the remainder of calendar year 1976 are unlikely to be great.
But 1977, all going well, should see the start of a more concerted fall.
This Budget embodies and advances the Government’s overall economic and social strategy.
The economy is now set on the right path and the combination of expenditure and tax measures in this Budget will help it along that path.
For the first time in several years there are now good prospects of staying on a growth path we can sustain.
Inflation- and therefore unemployment- will not be wiped out overnight, but even on a not over-optimistic view of things they will be steadily reduced by the budgetary and other policies to which this Government is adhering.
After only eight months since, on coming to office, we confronted the full enormity of our inheritance, these policies are now beginning to produce results.
At the same time the Budget also reflects the Government’s priorities both as between private and public spending, and within the public sector itself.
It is, as I said at the outset, both a Budget for confidence and a Budget for reform.
As such, I commend the Budget to Honourable Members.
Debate (on motion by Mr E. G. Whitlam) adjourned.