30th Parliament · 2nd Session
Mr SPEAKER (Rt Hon. B. M. Snedden, Q.C.) took the chair at 2.15 p.m., and read prayers.
- Mr Speaker, I move:
Mr Speaker, it is my sad task to speak today of the death of one of the best known members of this House, the honourable member for Cunningham, Rex Connor. Rex Connor was the son of a waterside worker from the city of Wollongong, the city he was to serve faithfully throughout his life. He was dux of the Wollongong High School and subsequently qualified as a solicitor by working in a solicitor’s office and studying part-time for the Solicitors Admission Board course. He had a long and notable record of public service. For 6 years he was a member of the Wollongong City Council. In 1950 he was elected to the New South Wales Legislative Assembly for the seat of Wollongong-Kembla, which he held continuously until 1963 when he resigned to stand for the Federal Parliament. He won the seat of Cunningham at the 1963 general election and retained it until his death in Canberra yesterday. From December 1972 to October 1975 Mr Connor was Minister for Minerals and Energy and on two occasions during that period he served as Acting Prime Minister of Australia.
Rex Connor had a great capacity for work. He enjoyed wide support in his electorate and in his party. He was assiduous in looking after the affairs of his electorate. Doubtless his constituents recognised him as a committed nationalist, a committed socialist and a lifelong enthusiast for the Labor cause in which he so fervently believed, His primary interest, particularly in more recent years, was Australia’s energy resources. His policies on this issue were quite distinctive and controversial. As a Minister he was unremitting in his determination to bring those policies to reality. While many disputed the wisdom of his minerals and energy program, none doubted for a moment the strength or sincerity with which he held and espoused his views. Indeed, he has almost passed a word into the Australian language- ‘Connorism’. Whether or not one agrees with the sentiment which underlies that term, it is a mark of the impact that Rex Connor had on this House and on the wider international community. I found while on my recent overseas trip that there are many people overseas who remember him.
Rex Connor exhibited at all times since he joined this House complete loyalty to his party and to his leader. When he was in difficulty he made no attempt to clear himself at the expense of others. That of itself indicates an uncommon degree of dedication and commitment. Our late colleague was a significant member of this House. All honourable members were ever conscious of his presence and he will be sadly missed. I am sure that I speak for all of us when I say to his sons and grandchildren that we offer them our deep sympathy in their loss. I think I should also draw attention to the fact that the last few months of his life must have been sad because his wife died in, I think, April of this year.
– The singular, intense and very personal sorrow that we share in Rex Connor’s death stems not just from the loss of a familiar and much loved member of this Parliament. Certainly, on this side of the House no one stood higher in our affections; no one had a surer access to our hearts and loyalties. Our grief is sharp and deep. One very good measure of Rex Connor’s stature and popularity was provided by the ballot for the Ministry after my Government was re-elected in May 1 974. He topped the poll. The collective devotion and affection of his colleagues have never faltered since. We mourn today not just the passing of a friend, the loss of a colleague and the absence- still difficult to grasp- of a familiar and formidable personality. In his death we sense that something basic to our national character and national aspirations has been taken from us. He embodied what it meant to be Australian, the best kind of Australian- a man quietly and passionately devoted to the welfare and future of his country. His life bore the true stamp of greatness- greatness of ideals, greatness of vision, greatness of spirit.
For all that, he was never a noisy nationalist, a mere flag waver, a shallow patriot. He was a man with a great dream for Australia- a dream that he worked tirelessly to bring to reality. His mind and character were at home with fundamentalsabsolute values and basic concepts about the nature of our society and Australia’s place in the world. He believed passionately in a free and independent place for Australia in the world community; he believed in Australia as a great and growing power, a land of unlimited promise whose riches would serve mankind. To the very end of his life he held fast to a vision of Australia’s destiny. In his later years these ideals were expressed in a fierce crusade for Australian ownership of our natural resources. In the face of widespread misunderstanding, vehement hostility and bitter vilification, he pursued his goals with unswerving fortitude and force. Where lesser men would have yielded, Rex Connor stood firm for his beliefs.
His long record of service to civic, State and national affairs had no parallel in our Parliament. The particular focus of his loyalties and ambitions was the city of Wollongong, where his family had lived for five generations and where he was first elected an alderman nearly 40 years ago. He represented Wollongong-Port Kembla in the New South Wales Legislative Assembly for 13 years until he entered this House in 1963. He had worked for the City of Greater Wollongong to be created and then for it to be accepted as the centre of regional administration for south-eastern New South Wales. He saw that Wollongong ‘s prosperity and security lay in coal, and he spent his life promoting and selling the world’s oldest, most plentiful and most enduring energy resource. He saw that Wollongong would prosper by developing its great natural resource- coal; its great human resource- a skilled and educated work force; and its great natural feature- an excellent harbour. He secured the planning and construction of the Port Kembla inner harbour and its associated road systems. In every field- secondary and tertiary education, sport, recreation, the club movement- he was an active and forceful promoter of the interests and welfare of Wollongong and all its residents- those who were born there and those who had come there from other parts of Australia as well as from overseas.
All this was a preparation for his immense labours in the office that crowned his career and through which he directed his energies in pursuit of his life’s goals. As Minister for Minerals and Energy- the first in Australia’s history- he was responsible for a vast increase in export earnings from the sale of coal. His policies on off-shore resources, on a national pipeline grid and on the development of our natural gas reserves, his insistence on Australian equity in our mineral and energy resources- all these will be enduring legacies. For the first time, in Rex Connor,
Australia had a Federal Minister who was responsible for the long term development and conservation of our natural resources; for the first time we had a Minister who was determined to keep those resources in Australian hands; for the first time we had a Minister who was pledged and determined to co-ordinate our policies across the whole range of energy. As a result of his work no government, Federal or State, and no corporation, Australian or foreign, now or in the future will ever again downgrade or disregard the future security and importance of our natural resources or Australia’s stake in their development.
His word was his bond. He was meticulous in adhering to commitments he inherited, even if he would not have made them himself. Inevitably he made enemies; their vindictiveness pursued him to the end. To those who knew him least he was an implacable opponent, even something of a bogy man; but those of us who knew him best will remember only his quiet humour, his warm sense of comradeship, his inner strength. Above all he was a man of unshakable integrity. In the extraordinary circumstances of October 1975, in the decision I was obliged to take- as difficult and painful as any I have had to make- I emphasised that his honour, his integrity, his propriety were never in question. I emphasise that again. He left office with his dignity, his stature unimpaired. Never in the months and years that followed did he bear a grudge or betray the slightest recrimination. He was, as in all things, too big a man for that. Two years ago he quoted some lines that aptly describe the scale of his ideals, the largeness of his mind and his character. They were:
Give me men to match my mountains, Give me men to match my plains. Men with freedom in their vision, And creation in their brains.
Let those words be the epitaph of a great colleague, a great Minister, a great friend and a great Australian.
– I join with the Prime Minister (Mr Malcolm Fraser) and the Leader of the Opposition (Mr E. G. Whitlam) and express on behalf of the Australian National Country Party our sympathy at the loss of Reginald Francis Xavier Connor. I think occasions like this are made much sadder when we are speaking about a colleague who was a current member of the Parliament, a colleague who, over the years, participated fully in the functioning of this House and with whom, on many occasions, one has exchanged the cut and thrust of debate. That being so, one has an even greater respect for the contribution that that person has made to the running of this country.
Rex Connor was a very unusual man. He was a controversial character. But no matter how hard the criticism might have been, he remained steadfast, firm and determined in whatever his belief or policy might have been. He was what I consider the old style of Labor man. He was a socialist. He had strong beliefs and held fast to them. He was a man who had great dreams or visions among which was a national pipeline authority. I was very pleased recently to be able to ask him to share with me in the unveiling of a plaque at the opening of the Moomba to Sydney pipeline. I say this because I think Rex Connor truly deserves credit for the construction of that pipeline. He was determined to see it built and therefore it was more fitting that he, rather than I, should participate in that function as I had just inherited the position of Minister for National Resources.
Rex Connor was a man who will be long remembered for his contribution to this Parliament. His health had not been good in recent times. We all saw the strain under which he was operating. I would like to express sympathy to his three sons and to his very big family at his loss and also at the recent loss of his wife.
-The Leader of the Opposition (Mr E. G. Whitlam) dealt very eloquently with the record of Rex Connor, as did the Prime Minister (Mr Malcolm Fraser) and the Leader of the Australian National Country Party (Mr Anthony). But his death is a great personal loss to me, to the Parliament and to the nation. He was a great nationalist, as people have described him. He developed a strategy for Australia’s wealth and resources at a time really when no one else was interested in this subject. When I came to Canberra in 1969 only two or three people in the Parliament really had any interest in national resources. Only a few people had ever thought about the huge potential which Australia would gain from these massive endowments. Yet he put a plan of his own together. He was a man of vision whose paramount aim was that Australia’s natural endowments should be developed for the benefit of Australians under the control of Australians so that Australia itself could control its destiny. To that end he was successful.
At this stage in our history I do not think anyone will argue that resources policy has taken on a direction, even under the present Government, which cannot be sheeted home directly to the foresight of Rex Connor. Internationally he was respected by our trading partners. On my visit to Japan last year senior people in the Japanese Government and in Japanese business told me that they were surprised at the tenacity with which he pursued the Australian national interest when that had not been the case so often with other Australian Ministers. He forced a shake-out of opinions of vested interests and companies around the world which were interested in Australia. I think most of them now privately concede that the general directions which he took were correct.
The unfortunate thing about Rex Connor was that the pressure of public life took heavy toll of his health. If one looks at the constant pressures of politics one finds that perhaps he paid a higher price in recent memory than did anyone we can recall. He was subjected to constant vilification while he was a Minister, not just for his ministerial views or his public responsibilities. He was attacked rather personally for the better part of 3 years not only by his opponents but also by the media. Perhaps that is why he had no time for the Press or for the media generally.
I thought it was a shame that a great Australian who had worked tirelessly for the benefit of the nation should be pursued privately- that is by the device of the Sankey case- with his public deeds becoming the subject of a private prosecution. He took the law seriously. The prospect weighed very heavily upon him that in retirement he could still be facing criminal prosecution for something he was alleged to have done as a Minister. I think this case is a blight upon this Parliament not just because of Rex Connor’s death with the charge against him unresolved but because the case for the prosecution seeks to establish that everybody in the Parliament can be held privately accountable for public deeds. I think that matter told very heavily on his health, unfortunately, and was a contributing factor in his decline. Nevertheless I think the testimony to his life is the fact that kind, nice things can be said about him in a genuine way. He was a great Australian. He was a slave to no ideology. He was a pragmatist and always put the Australian national interest first and foremost. His death is a great loss to the Parliament and the nation and to me personally. I join the Leader of the Opposition (Mr E. G. Whitlam) and other speakers in expressing my sympathy to his sons and loved ones.
-My memory of the late honourable member for Cunningham, Rex Connor, goes back a very long way. I remember him long ago as a member of a group in the Wollongong area which could be regarded as the extreme left wing of the then Australian Labor Party. My memories were refreshed in 1973 when, I believe, it was a case of paradise lost and paradise regained. I went into Opposition and was rather miserable to find that I was poked into a room in the corridor immediately beyond your chambers, Mr Speaker. Paradise regained was quartered diagonally opposite in the form of the honourable member for Cunningham. The honourable member had served in the State Parliament and then came here and achieved ministerial honours. It was here that my memories of him were revived. When I was in the room opposite his, I knew I could discuss political matters with him, even though there was a substantial difference of opinion between the two of us. He never hesitated to answer on the telephone: ‘I will be across in a couple of minutes’. He always kept his word. While one could argue with him and find him difficult to convince, on at least two occasions I can remember he changed his mind and policies which might have been adopted were altered as a result of our discussion, or at least that appeared to be so.
The first point I make about him is the charm of the man in personal conversation when the subject was divorced from political consequences. The second point I make about him relates to his ability in his portfolio. Few people can deny his great knowledge. Without reference to notes he seemed to know the industry backwards. He could quote figures with a relish and in a way that I envied. Whilst I thought he was too much of a socialist and I frequently, perhaps almost always, disagreed with this attitude, no one could deny that in relation to our international trade in minerals he took the side of private enterprise in order to ensure that Australian exporters got the best deal they could in negotiations with other countries.
For those reasons I have to say that I liked him as a person. He was an important member in this House. He was a personality in his own right. He attracted attention. Parliaments these days do not have many personalities to look up to, to criticise, to talk about and talk to. I extend my condolences to his surviving children and I join with the Prime Minister (Mr Malcolm Fraser) and the Leader of the Opposition (Mr E. G. Whitlam) in saying that I am sorry in a personal sense to know that he has gone.
-I join with the other speakers to express my personal regret at the passing of this very great Australian. He was one of the greatest characters and the greatest intellects to sit in this Parliament during the period that 1 have been a memberindeed, not one of the greatest intellects but the greatest intellect. He was an expert on law; he knew a lot more about law than some of the socalled experts in law. He was a great economist; he knew a lot more about economics than the socalled experts in economics. He was a great politician; he knew a lot more about politics than a lot of the so-called experts in politics. He was a great socialist. He was a great Laborite; he was a real Laborite. He came from the ranks, from the working class. He belonged to the working class and never forgot what the working class was all about. He was not a professional Laborite. He was not in the Labor Party for what he could get out of it. He was in the Labor Party for what he could put into it, and for that reason I salute the man and his memory- the memory of a very great Laborite and a very great parliamentarian.
Oddly enough, and perhaps contrary to the general view of the man, Rex Connor was a very shy person. He was not the bluff, aggressive, truculent person that those who did not know him painted him and believed him to be. He was a very gentle person as well as being a very shy person, but he could not suffer fools gladly. Because he could not suffer fools gladly and would walk away from them or shun their company he was thought to be arrogant and overbearing. But he was none of those things. He was a man of very great integrity. He was very jealous of his good name. He was very jealous of his reputation. He valued that above all other things, and anyone who in any way cast an aspersion on his reputation, on his good name or on his integrity wounded him very deeply. The way to wound Rex Connor was to suggest, even to hint at, the prospect of his doing anything that was wrong or shady or smacked of dishonesty.
What I liked about Rex Connor was that he was never ashamed to be known as a socialist. He never disguised the fact that the Labor Party is a socialist party, and that is what he wanted it to remain- a socialist party. He often said that once we take away the socialist objective of the Australian Labor Party we destroy the only real difference between the Labor Party and the Liberal Party. He said that if we take away our commitment to the socialist objective we are taking the first step towards a degeneration of Australian politics to the point where there will be no more difference between one major party and the other than there is between the two major parties of the United States of America. For that reason, he always said that it does not matter that the Australian Constitution prevents the socialisation of industry, production, distribution and exchange. That is not the issue. He said that we have to set an objective for the socialisation of industry, production, distribution and exchange, hold on to it fast and educate and agitate for it to the point where the people of Australia will be prepared to alter the Constitution to permit the socialist objective to be implemented. He said that if we as a party were to throw that objective away we would also throw away any intention of wanting the Constitution altered. That was and would have been to him and to all people who believe in the Labor movement a great tragedy.
The Prime Minister (Mr Malcolm Fraser), very correctly, remarked on the fact that Rex Connor was a great nationalist, and so he was. He also said that Rex Connor was a great socialist, and so he was. Rex Connor would not mind the Prime Minister saying those two things about him. He would smile if he could hear those words being said after his death, because he would want people to remember him as a great nationalist and as a great socialist. That is what he was. Of course, the Prime Minister always attacked him for being a socialist and for being a nationalist. Being an arch-conservative himself, the Prime Minister could not be expected to do other than attack him for being a nationalist and a socialist. It was proper, nonetheless, that he should mention those two great things for which Rex Connor stood.
Of course, Rex Connor was a great nationalist. He wanted to see Australia- that is, the Australian people- build, own and control a pipeline from our western seaboard to our eastern seaboard, to convey the enormous quantities of natural gas which he believed were obtainable from the North West Shelf. He did not want some private enterprise to own the pipe grid so that no matter who owned the gas or who wanted to use the gas, the owner of the grid would be able to dictate the price of the gas. He wanted the Australian people to own it so that no one could exploit those who produced the gas and those who used the gas. He wanted to establish in Australia a petro-chemical industry costing something like $600m. He believed that, with the discovery of gas and our own oil resources, Australia ought to receive the benefit from the by-products which a petro-chemical industry could provide. He wanted that petrochemical industry to be owned by everybody in Australia. Every man, woman and child in this country would be an equal shareholder in it so that no foreign multinational corporation could exploit them as is being done in so many other industries. He wanted to see the Australian people- every man, woman and child in Australia- being an equal shareholder in the exploitation of Australia’s resources of gas on the North West Shelf. He did not want to see foreign cartels and multinational corporations getting the benefit of that which was put in the North West Shelf for every Australian, not just for a few overseas investors. He wanted everybody to share in its benefits. He wanted to buy back some of the farm. Those were his aims and objectives.
He set about trying to borrow the money from overseas to make it possible to do all of those great things. Had the people of Australia known what his program was and had they understood the reason why he wanted Australia to own Australia’s natural resources, what he did in order to try to obtain overseas loans would have been applauded instead of being condemned by those who out of ignorance did not understand what it was all about. The money was available. The Middle East countries between them are getting $65 billion a year in royalties for their petrol and oil. Those countries had the money and were prepared to lend. But for the blatant interference by Treasury officials and the politicking by the then Liberal-National Country Party Opposition, I am convinced that the money would have been made available and that Australians would have had those resources to call their own. Instead of that, we now find that the same amount of money is being borrowed by private enterprise so it can become the controller and owner of that which Rex Connor wanted Australia to have.
Rex Connor was a very loyal colleague. He always said that the test of loyalty is not to support someone when you believe his judgment is right. Anyone can do that; even an enemy can be forced to do that. The test of loyalty is to support a colleague when you believe that his judgment might be wrong. Rex Connor believed that in government a Minister should be the one to determine what ought to happen within his department. His view was that once a person was commissioned by the Governor-General to run a department he was the one who should be permitted to run that department, subject only to the overriding decision of the Cabinet as a whole or of the Caucus. That was one of the things which distinguished him from other people.
I sat next to Rex Connor in the Cabinet and on the ministerial benches. I had a lot of talks with him. I think I was closer to him than most people in the Parliament; certainly, I believe I had more talks with him than most people in the Parliament. I had very long talks with him. One day what we talked about no doubt will be published. Rex Connor was a man worth talking to. One could always learn something from a talk with him. In fact, I moved the motion, which was adopted by Caucus, to acknowledge his work as a great Australian and as a great Laborite. I am proud of the fact that I moved that motion. I could have done little less.lt is not surprising that Caucus unanimously adopted the motion.
Rex Connor’s resignation would have been rejected by Caucus had it not been for his intimation to Caucus that he had intended to stand down by the end of the year. Nonetheless, he was hurt inwardly by the fact that the Prime Minister had demanded his resignation. He was a very proud man and valued his good name. His position was vindicated completely when the Caucus met after the 1975 general election and re-elected him to the shadow Cabinet. That gave him enormous pleasure. It gave him a great deal of pride to know that his colleagues in the Caucus still had complete faith in him as a person.
His pride and his jealousy of his good name and of his good reputation caused him a great deal of anguish in the Sankey litigation. He felt that he was being pursued for political motives only. He was worried about the mounting costs of the litigation. The Prime Minister eventuallytoo late, I think- agreed that the Government would meet the costs in the same way as the Labor Government met the costs of Senator Webster when he was under attack in the courts, including the High Court. It was very proper that the Government should have met the costs. But this Government allowed Rex Connor to suffer for nearly 2 years before it was announced that the costs would be met. He was worried about his good name. Nothing hurt him more than for someone to suggest that he would do something mean or dishonest. These people have had their fun. I hope they are satisfied with the result of their persecution.
I believe Rex Connor should have been Prime Minister of this country. He would have been a great Prime Minister. He would have joined Curtin and Chifley as the three greatest Prime Ministers this country has seen because he was a great Australian, a visionary. He was not a mean man. He was not a little man. He would have been ideal for the position. What sickens me is the hypocrisy of the Press and of those who denigrated him in life and who now tell the truth about him only after he is no longer here to benefit from hearing it. The Press and the denigrators of Ben Chifley did the same thing. The night before he died he was pictured by one Sydney newspaper as an agent of the Kremlin. The next morning the same newspaper described him as Australia’s greatest son. It is this hypocrisy of the people who control the media that sickens me. They knew all along, apparently that Connor was a great man and yet in his life they went out of their way to picture him as a man who was anything but great.
He was many years ahead of his time- at least 20 years ahead of his time- and history will record this fact. History will give a very proud place to the name of Rex Connor. No Minister was more in command of his Department than was Rex Connor. He was greatly respected by his permanent head, Sir Lennox Hewitt, and a Minister needs to be good to command the respect of Sir Lennox Hewitt, who is known to all of us either personally or by repute. He also commanded the respect of those beneath Sir Lennox Hewitt. Whether they were retired sea captains or of some other calling, he commanded their respect because they all realised that they were dealing with a Minister who knew more about his Department than did any person in it. They all knew that they were dealing with a man who was more conversant with the activities of his Department than anybody else in Australia. He negotiated a new price for coal which benefited the coal producers in Australia but I have not yet read any words of appreciation from them for it. He told his colleagues in 1972 that uranium, which was then $6 per lb would rise to $40 per lb by 1977 and to $100 per lb by 1980. Rex Connor has been proved correct in all his prognostications.
I have lost a very great and loyal friend, a great Laborite. His sons have lost a loving and very distinguished father and his many other close friends have suffered the same grievous loss as I have suffered. Australia has lost one of its greatest sons. He was an intellectual giant by any standards and Australia can ill afford to lose such people.
-It is my intention to speak very briefly in honour of Rex Connor and to pay a tribute to him as a member of Parliament with whom I shared electoral boundaries for some years. I pay tribute to his innate personal good manners and kindness at all times. As a local member he knew few, if any, peers. At all times he was most concerned for his constituents. Our association over the years, whether I was in or out of this House, related to the welfare of the people in his or my electorate. When his funeral leaves the cathedral in Wollongong on Thursday the people of Wollongong will not be thinking that they have lost a great Australian to whom due reference has been made today; they will be paying tribute to a man who perhaps has been the greatest son Wollongong has produced.
-My remarks will be brief. I want to place on record my respect for Rex Connor’s contribution to the Labor Government, which was the plan to ensure that the benefit from the development of Australia’s vast mineral resources flowed to the Australian people. In doing this he challenged the power of the mining corporations and the wealthy financial institutions within this country and overseas. I repeat today what I said in the party room on the last day on which he was a member of the Labor Ministry: Rex Connor, more than any other member of the Labor Ministry, confronted the system, and for that he paid the price. Rex Connor served his electorate well. He served his class. We on this side are indeed proud of his contribution to the Labor movement.
– I wish to add my small tribute to Rex Connor on two grounds: Firstly, like the honourable member for Cook (Mr Dobie) I have been an electorate neighbour of Rex Connor. I had the opportunity to attend many functions with Rex Connor and his wife in Wollongong. I certainly found on those occasions all the personal characteristics which have been so accurately ascribed to him in this chamber today.
In particular, I speak of Rex Connor in another context for me; that is, as an exjournalist. Only a few weeks ago the Leader of the Opposition (Mr E. G. Whitlam) and I attended a function in Wollongong in honour of Rex Connor. It was a function put on by the journalists of the Illawarra area. It was. attended by the leading members of the Australian Journalists Association in Australia. One could say that it was a function at which the Press made its peace with Rex Connor. I certainly am grateful that that took place. I regret that Rex Connor was too ill to attend that function, but I am sure that what could have been called the burying of the hatchet or the making of peace between the journalists of Australia who have been referred to today and this very strong and determined Australian took place to the benefit of everyone. . >
-I also “had the honour of working closely with Rex Connor as we had adjoining electorates, each of us representing substantial parts of the City of Greater Wollongong. We were close friends for a quarter of a century. I held him and his late wife,
Grace, in high esteem. Big Rex had a great feeling for the little people he represented- the miners, steel workers, migrants and pensioners. They loved and honoured him for his strength of character and unrelenting devotion to their cause. Often I felt his intense sense of pride as we walked together at the head of Labor and trade union marches through Crown Street, Wollongong. They all knew Rex and he identified with them by reaching out to shake hands and waving a response to their encouraging calls.
He was the undisputed titular head of the Labor movement in Wollongong, a great Labor region. He led countless well-conceived sorties to upgrade the lives of the people in that region through local, State and Federal arms of government, all of which he served with distinction since he first entered local government 39 years ago. There are countless manifestations of his leadership and unrelenting efforts. A modest man, he avoided flamboyant publicity and had an aversion to those media men whose motives he distrusted. Yet he communicated with his constituents through a high quality column in the Illawara Mercury because that organisation agreed not to fiddle the copy. In Labor Party branch meetings, which he attended assiduously, he was a no-nonsense man who succinctly gave a brilliant analysis of the political issues of the day. He was tireless in attending electorate functions and readily made himself available to assist constituents.
I visited him last week in hospital and despite the great discomfort of his illness he showed the bravest front and enthusiastically canvassed the current political scene. We discussed the pending redistribution of electoral boundaries, the plight of the unemployed for whom he felt very strongly, the uncertainty of the South Coast mining industry which he feared could be the subject of intense competition from Queensland open cut mines which have an economic advantage and, of course, we discussed the state of the economy. At his request I sent the Budget Papers to the hospital and I have no doubt that he mustered his ailing strength to apply his fine analytical mind to the consideration of their consequences. We discussed the quality of the preselection candidates who were aspiring to succeed him as the Labor member for Cunningham. He expressed the warmest satisfaction with the quality of these proteges and was sure he would be around to fortify his successor for another 1 5 years or so as he expected to live well into his eighties like his forebears.
Wollongong is now in mourning for the loss of its most distinguished son. The memory of this fifth generation Australian and third generation Australian Labor Party stalwart will be revered for generations to come. Men and women of the Labor movement will seek to emulate his fine example. People in the streets, the shops, the factories and the mines throughout the Illawarra will be saying this week: ‘Rex Connor not only passed this way; indeed, he made this way’.
-I join with previous speakers in paying my tribute to Rex Connor, the man I knew and with whom I worked. As a new member of the Parliament in early 1973 I appreciated Rex Connor when I came here. Like all other new members I arrived not knowing where to start nor how to go about things. It was from Rex Connor that I received the hand of welcome. He gave me advice and guidance and reassurance when things became difficult. Rex was described by the media as a big man. He was a big man physically and he had a big heart but I found him a very humble man. That was the Rex that came across to me in my dealings with him. I found him to be a man with a great love for his country. It seemed to me that that was the crime for which he paid the penalty of being maligned and smeared as no man in my memory has been smeared by the media of this country. Lesser men would have yielded, would have weakened, under that onslaught. All it did to him was to strengthen his resolve, his determination and his dedication to see that his efforts and the efforts of the Australian Labor Party in this place were directed towards ensuring that the resources of this country and the wealth of this country were developed in a way that would ensure that they were shared to the best advantage of all Australians, not just to some Australians and some people outside this country.
Last evening I was grieved and became angry when I heard on the PM program a rebroadcast of an interview that apparently had been recorded during the height of the so-called loans discussion. I thought nothing could be more inappropriate when Rex had barely passed on, had barely left the world of the living. That recording was resurrected not in reverence for the man or in respect of his efforts and ideals but simply for its media value. The words and questions that related to a contrived series of events were resurrected simply for media consumption. Following that there was a man commenting on the past and the performance of this great Australian. Towards the end of his commentary that man said: ‘It seems that we will never really know what transpired in the loans affair’. If there was a way of denigrating the memory of Rex Connor, to my way of thinking that was it. I am sorry it happened. I wish it had not happened. Rex Connor was a great Australian. As the honourable member for Hindmarsh (Mr Clyde Cameron) said, it is strange that in the media of our nation great men are recognised only after their death and not in life. I convey to members of his family my deepest sympathy and condolences at their loss and Australia ‘s loss.
– I wish to place on record that Rex Connor and I were very close pals. We were brought together in our ideology by the fact that that we represented similar electorates. His electorate of Cunningham and my electorate of Hunter are steeped in Labor traditions. They are built on the backs of the coal miners- the men who hew the coal from the bowels of the earth. He passionately believed, as I do, that coal, like other minerals, is a Godgiven asset that belongs to the people and should not be permitted to be put into the hands of private enterprise for it to make profits.
I would like to give voice to something which I believe the Miners Federation would like me to say. It is something which has not been mentioned by any of the previous speakers today. Some three months ago, outside our party room, Rex Connor showed a medal to me and said: ‘Bert, look at what they have done for me’. The Miners Federation had bestowed upon him life membership of its worthy organisation. That is something which is seldom done to a man in public life. I join the other speakers in extending my deepest sympathy to the children of this admirable Labor man.
-I wish to add my support to all the wonderful remarks that have been made about our friend and colleague, Mr Rex Connor. I had a very close association with Rex during the period of the likely closure of the South Mine at Broken Hill. I also had long discussions with Rex on the effects that the Petroleum and Minerals Authority Bill would have on his support for small mines. I am quite sure that if the Petroleum and Minerals Authority Bill had not been challenged at law the South Mine at Broken Hill would have remained open a lot longer than it did. Of course, the possibilities in the event of its remaining open were untold. There is a great body of ore there. It may be that more would have been discovered if it had remained open. No one knows what wealth would have come out of it. Rex really appreciated that aspect. He assured me that if the Petroleum and Minerals Authority Bill had become law he would have lent some support to the mines at Broken Hill. On behalf of all the miners at Broken Hill and all his other friends in the
Darling electorate I would like to convey my sincere condolences to his family, relatives and many friends.
-We have heard a great deal about Rex Connor’s intellect. The one thing that I think Rex Connor embodied to everyone who spoke to him was commonsense. He expressed himself in terms which everyone could understand.
Unfortunately many of the members of this House who would have wished to be present at his funeral on Thursday will not be able to be present because of the duties of Parliament. I feel that this is the appropriate time to indicate that any absence from that funeral of members of this Parliament, especially from this side of the House but also I am sure from the other side of the House, will not be because they do not wish to pay a final tribute but because they are unable to be present as they are doing what I am sure Rex Connor would have wanted them to do, that is, attending to their duties as parliamentarians.
-I was a colleague of Rex Connor in the New South Wales Parliament as far back as 1962. He was a great admirer of the professionalism of Macquarie Street and I often used to have discussions with him about our adventures there. He was a leader in that sphere as well as being a leader here. It was a great pleasure to be associated with him not only on the back bench but also in the Ministry. He was a great personal friend of mine, a man of compassion and a man of great admiration for Australia and all things Australian.
I do not think Connor ever wanted to look backwards; he always looked forwards. His big message for Australia was that this country would always survive. He said that a characteristic of Australians was that they would never give in; that they would never surrender. He used to say to me: ‘You know, they will never take this country, Bowen; they will never be able to beat every one of us’. I think we as Australians should remember that Connor stood for Australia and Australians. His death is a great loss to this country and to our Party.
Question resolved in the affirmative, honourable members standing in their places.
-I thank the House.
Mr MALCOLM FRASER (Wannon-Prime Minister)- As a mark of respect to the memory of the late Rex Connor I suggest that the sitting of the House be suspended until 8 p.m.
– I am sure that that suggestion will meet with the concurrence of the House.
Sitting suspended from 3.11 to 8 p.m.
Motion (by Mr Howard)- by leave- agreed to:
That so much of the Standing Orders be suspended as would prevent Order of the Day No. 2, Government Business, being called on and proceeded with forthwith.
Debate resumed from 16 August, on motion by Mr Lynch:
That the Bill be now read a second time.
– No Budget Speech ever presented to this Parliament has set out to hide so much and deceive so many as has the speech the Treasurer (Mr Lynch) delivered a week ago. Never has a Budget Speech made such false claims about the actual contents and consequences of the Budget itself. Never has there been so huge a gap between the propaganda of the Budget Speech and the stark truth of the Budget papers. Never has a Budget Speech been so quickly discredited, with those ready to applaud it on Wednesday seeing it on Thursday for what it was- in the words of the Australian Financial Review:
A shabby confidence trick unworthy of any serious government.
It is no accident that the Prime Minister (Mr Malcolm Fraser) and the Treasurer are at odds about this Budget, about what it costs and even what it contains. Setting out to deceive and confuse the Australian people, they have ended by confusing themselves. For the Budget Speech is a cover-up- a cover-up for the Government’s failures and blunders in economic management over the past 2 1 months; a cover-up for the appalling economic prospects Australia faces in the next year; a cover-up for the destructive policies this Government intends to impose through this Budget and a cover-up for the Budget itself, its real purpose, content and consequences. Scarcely a line in the speech is not contradicted somewhere in the Budget papers; scarcely a proposal in the Budget is not modified or nullified by other proposals hidden away in the fine print; scarcely a benefit which it purports to confer is not taken away by a hidden penalty.
The cental features of the budget are these: It does not reduce unemployment, it increases it; it does not reduce inflation, it increases it; it does not reduce the burden of personal tax for most Australians, it increases it; it does not increase business confidence, it even further reduces it; and it does not increase the chance of economic recovery in 1978, it destroys that chance. That is the real message of this Budget- increased unemployment, reduced living standards, increased inflation, reduced confidence, increased tax burdens for families, reduced services for the whole community. I make these assertions strictly on the basis of the published Budget documents, not of course that most misleading and dishonest of all documents, the Treasurer’s speech, but on the documents published with the Budget. The Treasurer claimed:
Our first goal is to maintain the underlying trend to lower inflation.
Yet the official Treasury figures released with the Budget show that the underlying rate of inflation has jumped by 47 per cent in the last six months. Some goal, some trend, some reduction!
The Budget’s second goal, according to the Treasurer is:
To promote moderate and non-inflationary growth in order to create jobs and reduce unemployment.
Yet the Budget projects a growth rate of 2 per cent, half that of last year. On this basis it is inevitable that unemployment will rise above 400,000 next year. Some goal, some growth, some reduction! The Treasurer claims that the Budget ‘lifts the yoke of taxation’. Yet the Budget statements show quite explicitly that the Government expects to increase the net revenue through personal taxation by 17.2 per cent and this is in a year when it hopes to drive real wages down and in a year of mounting unemployment. Some goal, some liberation, some reduction!
This Budget which purports to set Australia’s economic course for 1978 is almost certainly the last effective, regular Budget before the next elections, whenever they be held. In that sense and only in that sense, it deserves the description of an election Budget. If this Parliament runs a normal term, the 1978 Budget would be effective as an economic instrument only in 1979. It would be economically irrelevant, whatever its political content, to the first half of the financial year, 1978-79. Thus, in terms of Budget planning, the Government has already had the three years grace which the present Prime Minister demanded nearly two years ago, and which the then Opposition had determined from April 1973 that a Labor Government would never be allowed to have and which the present Prime Minister ensured we did not have.
This Government, this Prime Minister, this Treasurer have enjoyed the longest period of immunity from the pressure of elections or the pressure of political upheaval of any government for eight years- since the 1969 elections. Thirteen months after the 1969 elections, the then Government had to face the 1970 Senate elections. Five months later the present Prime Minister procured the destruction of the Gorton Government, of which he had once been so strident a supporter. Twenty months later the McMahon Government fell. Seventeen months later the then Opposition forced the double dissolution of 1974 and another 17 months later the present Prime Minister blocked the Hayden Budget. This Government has now exercised 2 1 months of untrammelled power in both Houses.
Further, this Government can, if it chooses, enjoy two and a half years without the need for another national election, either for half the Senate, or the House of Representatives, or the House of Representatives and half the Senate together. This is the first time any government has enjoyed such an opportunity since 1963. So, this Government has had more time and opportunity to implement firm, steady, forwardlooking economic strategy than any of its predecessors for the best part of a generation. Yet with all these unparalleled political advantagespossessed by no government since 1963 - recovery is further away than ever, inflation is worse and unemployment far, far worse than ever. The Australian people should know exactly what has happened. Two things have happened. Firstly, we have seen the most ideologically determined, doctrinaire, Prime Minister, temporarily freed from normal political constraints, imposing his boarding school prejudices on the nation and on the economy of the nation. Secondly, this Government believed that after 13 December 1975 it had an unprecedented opportunity to apply a draconian economic program within the three-year political timetable it allowed itself. It has to be emphasised that what we have had in the past 21 months is not an economic program for recovery but a political program geared to an election timetable.
The grand design was to have a tight year in 1976, a year of consolidation in 1977 and an easing-up in 1 978, in the run-up to the elections. The plan has not worked. The plot has gone astray. The timetable has been shot to pieces. It took no account of economic realities or how modern economies now respond- much more slowly and much less predictably- to orthodox measures. Above all, it took no account of the impact of economic decisions on the lives and well-being of human beings- the thousands of young people whose prospects in life have been blasted on the very threshold of their working lives, the migrants who came here for better opportunites and whose opportunities are being destroyed, the small businessmen being forced to close down, the families being deprived of a second or even first earned income, the people paying off a home mortgage or wanting to buy their own home, the Aborigines whose hopes for a decent place in their own country have yet again been deferred and denied.
After the longest period without political disruption since 1969, with the opportunity for the longest period without a national election since 1963, this has happened to the Australian economy under those who make special claims to be superior economic managers: Unemployment higher, inflation running higher, growth lower, the dollar weaker. Unemployment is 86,000 higher than it was two years ago. The Treasury predicts that inflation next year will run at 10 per cent, the same rate or even higher than Treasury two years ago predicted for 1976. In October 1975 the Treasury produced a document revising downwards the predicted inflation rate for 1976 to around 10 per cent. The Treasury recommended that the new estimate not be published until the economic difficulties caused by the constitutional crisis of that month and the crisis itself were resolved. By then the document, the prediction, the Treasury and the government itself were in other hands. But I repeat, the Australian Treasury predicted for 1976 an inflation rate of about 10 per cent- the same prediction the Government now makes for inflation in Australia for 1978, its third year of office. And, as shown in the Budget Papers on page 71, the rise in the cost of living, recorded in the consumer price index, has been higher in each of the three 6-monthly periods of this Government than it was in the last six months of the Whitlam Government. Under the effect of the Hayden Budget recovery was under way, industrial production was increasing, unemployment and inflation were falling. These trends continued into early 1976, as long as the Hayden Budget was allowed to work.
The main differences between the Australian economy now and two years ago are these: Inflation is as high; unemployment is much higher; recovery is as far away as ever, but two years have been lost. Above all, whereas two and three years ago Australia’s inflation, Australia’s unemployment, Australia’s level of economic activity all ran parallel to overseas trends and were all part of a world economic situation which we shared with most of our trading partners in the Organisation for Economic Co-operation and Department, in 1976 and so far this year the pattern has been reversed. Two years ago Australia was one of the very few OECD countries to achieve some growth at a time when the OECD average showed negative growth. Australia had a strong dollar.
The policies of this present Government have destroyed the economic recovery generated by the policies of the 1 975 Budget, a recovery which was occurring in the second half of 1975. Worse, the policies of this Government ensured that Australia never shared in the world recovery which was then under way but which slowed down earlier than expected. We have indeed had the worst of both worlds. Before 1975, Australia shared the worst effects of the world downturn; but directly and solely because of this Government’s policies we have never shared the benefits of the international recovery of 1975-76. But now it is too late. This Government has missed the bus. And for the first time since the oil crisis of October 1973, Australia’s economic problems and their solution depend more on what happens here than on what happens overseas, among our great trading partners. In a very real sense this Government can look upon its handiwork- the highest unemployment since the Depression, poor growth, continuing high inflation, drooping confidence- and say: ‘It’s all our own work’.
The 1 976 Budget posed, as this Budget poses, as a Budget to promote recovery and to retard inflation. Yet Budget Papers admit that the whole strategy of 1976 was blown off course by the devaluation of November. We read in Statement No. 2- The Budget and the Economy:
The necessity to devalue the Australian dollar in November 1976 implied, at the time, a marked change in the overall settings or macro-economic policy and the need to effect compensating adjustments to domestic policies.
Going beyond the jargon, the Treasury administers a sound rebuke to the Prime Minister and the Treasurer and says as plainly as officials can ever say that the Budget of August 1976 was cancelled three months later by the devaluation of November. If the devaluation has not yet had its full inflationary impact, it is only because of the deepening sickness of the economy under this Government. Unsold stocks are so high, consumer confidence so poor, and spending so sluggish, that sellers have absorbed or postponed price rises rather than see a further reduction of sales and profits. Devaluation has not yet been so damaging only because the deficiencies of 1976, including the Budget itself, were so damaging. The full damage of one decision has been delayed by the damage of all the other decisions.
When this Government devalued it ruled off the book, economically and politically. Now it has written on the new page a Budget which is severely contractionary, which will further deepen and prolong the recession- the worst since the Great Depression- a Budget which has drastically curtailed payments for capital works programs, created tremendous new problems for State and local government budgets, further undermined the housing and construction industry, ensured a continuing decline in business confidence and economic activity, deliberately increased the number of unemployed and further humiliated them, added to the cost of living index, added to the difficulty of small businesses and raised the burden of taxation for the overwhelming majority of Australian households. International mining corporations and the top handful of executives and professionals are the only real beneficiaries. To the overwhelming majority of Australians the Budget is a fraud; for vast numbers of our fellow citizens it is a disaster.
The key economic fact about this Budget is that it will have a contractionary impact on the economy. The 1976-77 Budget led to declining income and employment in the second half of that financial year- as I predicted it would a year ago. In comparison with that Budget the 1977-78 Budget will have a further depressing effect. The major economic mistake being made by the Government is the reduction in real outlays. This policy is in sharp contrast to fiscal policies in other industrialised countries. The OECD reports that real government outlays continued to grow in all the seven largest member countries during 1975 and 1976, and that ‘some acceleration of Government spending on goods and services in real terms can be expected during the current year’. So while other industrialised countries are increasing public expenditure, Australia is reducing it.
The effect of cutting government spending is to reduce the rate of growth of national income and thus of employment. The Budget Papers themselves admit that although there is some prospect for reduction in unemployment on balance the likelihood is for little or no change over this period’. That is gloomy enough -and even that is too optimistic. The cuts in real government outlays or nearly 2 per cent this year, combined with a cut of about 4 per cent last year, directly reduce employment in the depressed building and construction industries; they also reduce employment in manufacturing industries which produce building and construction materials. Further, cost-effective employment in the public sector will not increase. Accordingly, for example, the inadequate staff of the Department of Social Security will not be expanded to cope with the payments to increasing numbers of recipients of social security and unemployment benefits.
On the Government’s own admission, real average weekly earnings are likely to fall during 1977-1978. This is shown in statement 2 on page 95. This can only mean that people have less to spend, thus reducing total demand for goods and services, unless, of course, they use their savings or save less. But since savings have remained high, partly because of the insecurity created by high unemployment and high inflation, there is unlikely to be any decline in the saving ratio. This is supported by the results of the survey of consumer sentiment by the Melbourne Institute of Applied Economic and Social Research. The Institute says:
Measures to reduce real incomes are being reflected in consumer attitudes.
It also states:
The most striking feature of the survey result is the uniform nature of the movement across all questions with increased concern evident about income levels and about economic prospects.
The Institute concludes:
Overall, this downward movement in the index seems to run contrary to hopes that we have previously held that in spite of declining real disposable incomes the consumers would be prepared to draw on their savings to finance a modest growth in consumer spending after the June quarter of 1977.
So there will be no consumer-led recovery. Company investment is unlikely to expand because with high stocks, stagnant consumer demand and under-utilised capacity of about 20 per cent there will be no general incentive to expand productive capacity. Though mining investment may begin to increase during 1977-78, the increase will be slow and will have a relatively small effect on the economy. So there will be no investment-led recovery. The Government assumes that exports will contribute to stimulating the economy. But because of some slowing-up in the rate of growth in major industrial countries and lower prices for such major commodities as wheat and sugar, export receipts may not increase significantly. In fact, they might fall. So almost certainly there will be no exportled recovery.
The promises of a consumer-led recovery, of an investment-led recovery, of an export-led recovery, have all fizzled. That gets to the heart of the matter. What is needed is a jobs-led recovery and that can now come by a government-led recovery, by a government doing its job- providing leadership for this country. Yet this Government, by its fiscal policy in its Budget and its monetary policy, has run away from the job of leading Australia to economic recovery. The Government has set a money supply growth target of 8 per cent to 10 per cent for 1977-78. This implies a very restrictive monetary policy compared with the estimated growth in money national income of 14 per cent. So, not only will interest rates probably remain at their present high levels, but because borrowing remains expensive, as it was last year, new investment in housing and equipment and other building and construction will be discouraged.
The labour force will grow by about 120,000 during this financial year, the net result of school leavers and graduates from tertiary institutions entering the work force and people reaching retiring age. Even if national income increased by 4 per cent between June 1977 and June 1978, and productivity went up by 3 per cent, this would mean that employment would increase by only 1 per cent or about 60,000, leaving an additional 60,000 unemployed by mid- 1978. These rough estimates suggest strongly that unemployment will reach 400,000 by Christmas, 430,000 early in 1978 and remain well over 400,000 through the first half of next year.
The Treasurer claims that his first goal is to reduce the rate of inflation. This is simply not credible in view of the number of policies which increase the rate of growth of prices. These include destroying Medibank, which led to an increase in the consumer price index of 3.2 per cent; devaluation, the effects of which will continue for several years and which is expected to make a major impact on the rate of growth of prices in the current September quarter; the increase in company tax rates which will certainly be passed on via price increases; and the introduction of higher petrol prices which will increase price indices by at least 1 per cent during the current financial year. When we examine the actual decisions, we may well agree with the Treasurer when he said at the National Press Club last Thursday:
Inflation has been a primary goal of the present Government. It still has primacy.
That is the one straightforward candid statement he has made.
This Budget escalates the process of cut-backs in public spending begun in February 1976 and continued in the 1976 Budget. A year ago the public might have fallen for the line that this policy was part of the fight against inflation or they might have shrugged it off as a passing phase in which a new Government was unduly obsessed with the size of the Budget deficit. But this Budget shows that the policy is no passing phase, no temporary phenomenon, no short sharp shock. This Budget shows that the cut-backs are part of a deep-seated doctrine obsession irrelevant to economic circumstances or the current economic needs of Australia. The cut-backs continue more savagely than ever, more thoroughgoing than ever- not because the Government wishes to trim the bureaucratic fat, not because the Government wishes to avoid needless waste in administration, not even because it is determined to dismantle the most important initiatives and creative programs of the Labor Government. Even that is not the full explanation. It is acting for the sake of a dogmatic doctrine which sees the public sector itself as an enemy to be caged. All those people not least those in private business, who depend on the public sector for all or most of their income are to be penalised and squeezed. It is doing it despite the undertakings given by the present Prime Minister in 1975 to maintain essential areas of public spending.
The Budget Speech continues the process of deception begun in the Liberal policy speech of 1975. Sure, the process is being refined. The Government is becoming more sophisticated in its deceit. The 1975 policy speech denied that the great cuts would be made. The 1977 Budget Speech simply denies having made them. The major deception of the Budget is, of course, its tax proposals. But equally deceptive disgracefully so- is the presentation of the spending cuts, or in most cases, their lack of presentation- revealed only to conceal, displayed only to disguise and deceive. The Treasurer’s speech hides the nature of the cuts and their extent by the simple expedient of not mentioning them. Where a figure is given for this year’s spending, no figure of the past year’s spending is given, which might enable the ordinary listener or reader to measure the extent of the cut or even the fact that a cut is being made at all. Nobody hearing or reading the Treasurer’s Budget Speech could realise that there has been a tremendous squeeze on the States and local government; that the Government has broken its promises on education spending; that spending on health programs is down; that the provision for pensioner dwellings is down by 18 per cent in real terms; that funds for Aboriginal advancement are down 16 per cent in real terms; that provision for urban public transport has been cut by 25 per cent in real terms and funds for leisure and recreation facilities by 60 per cent in real terms; that urban programs have virtually disappeared; that the national sewerage program has been abandoned; that all migrants’ special serviceseducation, welfare, housing, health, languagehave been cut; that the growth centre agreements with the States have been unilaterally repudiated; that environment programs suffered cuts ranging from 24 per cent to 99 per cent in real terms; that the area improvement program has been abolished. Yet these are the real facts about this Budget, the deliberately concealed facts. And this is the real purpose of this Budget, the deliberately concealed purpose.
The cuts in this Budget are the price the Australian people must now pay for the $ 1,000m on remissions, handouts and benefits to the favoured few in last year’s Budget. That billion dollar splurge last year was presented as part of an economic package for recovery. There has been no recovery. That money has been thrown away. The result is more and deeper cuts, and cuts in essential programs. Let me give some more details. Flow of funds for the States has been nominally increased by 9 per cent- a reduction of 2 per cent in real terms on the Government’s own projection for inflation. Funds for specific purposes have been cut by 8 per cent in real terms and funds for capital purposes have been reduced by 12 per cent in real terms.
What must be the inevitable effect of this on the States in economic terms? A decline of 12 percent in capital funds inevitably means increased unemployment, a further downturn in the building industry, and a major slowdown of construction of schools, hospitals and roads. On the inflation side it is inevitable that the States will have to increase taxes and charges. They must do this not just to maintain services at existing levels but to make up the short-fall on commitments they properly entered into on the basis of undertakings by this Government. Funds for local government have been reduced by 7 per cent in real terms. There has been a major reduction in specific purpose programs for aged persons homes and hostels, pre-schools, sewerage, recreation and tourism. Direct payments to local government by Federal Government have been reduced in money terms from $ 1 5m last year to $ 1 4m this year- a reduction of 1 3 per cent in real terms. No funds are being made available for regional employment programs, even though unemployment exceeds 10 per cent of the work force in many local government areas, particularly rural areas, and in the outer suburbs of Sydney and Melbourne.
The Budget’s treatment of farmers is another and critical area in which this Government has broken its promises and offered nothing but more hardship. The Government has failed to provide funds for beef classification and it has failed to make specific commitments for the National Rural Bank. If all of this was not enough, it has now effectively removed from farmers the benefits of income averaging. This has placed a large group of primary producers on a higher tax scale and thus further retarded the prospects of recovery in the rural sector. Many of these cuts have been made despite the undertakings of the present Prime Minister in 1975. But that is only part of the story. There have been even more recent and more solemn undertakings made not under the pressure of an election but by Ministers formally and specifically- made in writing or made to Parliament. The Minister for Education, Senator Carrick, said on 4 November 1976:
I wish to emphasise that the Government has no intention of retreating from its undertaking to support real growth in the education programs on which the Schools Commission makes recommendations.
That promise has joined the Government’s promises on unemployment, inflation, Medibank, health centres, wage indexation, Aboriginal assistance programs, the means test, the home loans deductibility scheme, and many others in the waste paper basket. The Treasurer’s Speech repeated that $2,37 lm would be allocated for education programs in this financial year. The Treasurer claimed a 10 per cent increase in funding in money terms, but omitted to tell us that it represented no growth in real terms for schools, universities and colleges of advanced education. But it is not enough for the Government to break its promises. One might have expected in a period of severe financial restraint that priority would be given to those schools, government and non-government alike, which are most in need. Yet the only schools that will receive any real increase in Federal assistance in 1977 are those schools in the Schools Commission’s top two categories- those schools whose need is least. Funds for pre-schools have also been slashed in the Budget. The Government was meeting 73 per cent of the salaries in pre-schools in 1976-77. This has been cut to 49 per cent in this year ‘s Budget. Fees for pre-school education will inevitably rise, again favouring those who can afford to pay.
It should not be thought that only Labor programs are being dismantled. This so-called Liberal Government is taking the axe even to programs initiated by its predecessors. This Prime
Minister is indeed determined to make his mark on Liberal Party history. Sir Robert Menzies is to become a non-person. The Aged Persons Homes Act 1954 established the Federal Government’s role in subsidising the development of aged persons accommodation. Up until 1976, no limit had ever been placed on the total payments to organisations, churches and community groups which qualified for Federal subsidies in any one financial year. Last year, the Government for the first time placed a limit on the program and cut the amount provided by the Labor Government by 55 per cent. It then announced a three-year program. This year’s allocation makes it clear that that program will not be carried out.
Another example is water conservation programs. The Chifley Government, in co-operation with State governments, inaugurated water projects for the Snowy, the south-west of Western Australia and the Burdekin. The Menzies Government inaugurated none before 1963, but in that and every subsequent year the Menzies, Holt, Gorton, McMahon and Whitlam governments introduced Bills for such projects in every State- two score in all. Last May the Deputy Prime Minister and Minister for National Resources (Mr Anthony) admitted that ‘the present Government does not have a program of assistance to the States for water projects’. Last Wednesday he had to read a long abdication. He reverted to an attitude he used to express in 1962, namely, that water projects were ‘a State responsibility’, that ‘the State governments should find the whole of the money’. Now the Fraser Government is refusing to honour an agreement with the South Australian Government to improve the quality of water in the Adelaide metropolitan area- the driest city in the driest State in the driest continent in the world.
Three years ago my Government joined with every State government in a five-year hospital development program. The States were allocated $40m in 1974-75, $108m in 1975-76 and again last year; this year they are to be allocated $50m. All the projects on which the seven governments in Australia had agreed are now to be thrown into the melting-pot and will not be reassessed for another two months. Construction workers will have to be retrenched and patients neglected, particularly in rural and outer urban areas.
My Government inaugurated a national sewerage program in 1973 to eliminate the backlog of over half a million unsewered dwellings in urban areas in Australia. In 1973-74 the States were allocated $36.4m, in 1974-75, $108.6m; in 1975-76, $1,1 13m; and in 1976-77, $48.3m. The whole program has now been dropped. It was a co-operative effort in which 17 local and semigovernment authorities were participating in New South Wales, 12 in Victoria, 22 in Queensland and nine in Tasmania. It was operating with the blessing of every State government. Plans and estimates had been drawn up, equipment had been acquired, men had been engaged. Now the Federal Government has abdicated its responsibility.
There has seldom been a time when the recovery of health by the private sector depended so much on the public sector. The building and construction industry, the hundreds of small businesses which depend wholly or largely on government contracts for schools, hospitals, roads, sewerage and local government projects are even further disadvantaged by this Budget. Many of them will go to the wall because of this Budget. There is no economic theory or ideological doctrine so thoroughly exploded as that which says that the health of the private sector demands the dismantling of the public sector. All the seven largest Organisation for Economic Co-operation and Development countries are stimulating their economies through public sector spending. Indeed Australia already has a comparatively small public sector. Some comparative figures for current public expenditure on goods and services as a proportion of gross domestic product in 1974 were, according to the OECD: Australia, 15.4 per cent; United States, 1 8.8 per cent; Canada, 1 9.2 per cent; West Germany, 19.7 per cent; Britain, 20.5 per cent; and Sweden, 23.6 percent.
This Budget takes no account of the economic realities and the economic needs of the times or the economic realities and economic needs of the year 1 978 for which this Budget purports to lay the economic groundwork. It is not an economic document at all. It is a profoundly ideological Budget and a profoundly doctrinaire document. The savage attack on the public sector has scarcely any economic content at all. It has an overwhelming ideological content. Nothing in Australia’s present economic circumstances could justify the deliberate creation of a further 100,000 unemployed. Nothing in Australia’s present economic circumstances could justify the cutbacks in spending in those areas which will directly affect private companies and make survival for many of them impossible. Nothing in Australia’s present economic circumstances could justify a contraction of the economy when economic recovery must be the essential goal and when there is so much room for economic expansion. On its spending side, this Budget is the complete reverse of what Australia needs, it is the reverse of any common sense plan for economic recovery, for any common sense response to the urgent needs of the Australian economy and the Australian people.
What is done in this Budget is to apply the classical cure for an over-heated, booming economy to an economy which is foundering, an economy which is not over-heated, but frozen stiff. The Government is further depressing a badly-depressed economy. There can be no better illustration of how far the ideologues in this Government, starting from the top, have had their way and how much, not just the real human problems of this society have been swept asideyou might expect that from this Governmentbut how much the realities of our economic problems, the needs of our economy, the common sense solutions to our sheer economic problems have given way to an ideology, a doctrine, a disastrous dogma.
The week before the Budget, the previous Treasurer and I put forward proposals- not as an alternative Budget, but as part of a general program for economic recovery- which envisaged increased spending of about $550m net to provide another 50,000 jobs. Predictably and characteristically this proposal, like all other proposals for recovery, from any source, was immediately rubbished by the Prime Minister, the Treasurer and- rather pathetically I thought- - even by the unfortunate Minister for Employment and Industrial Relations (Mr Street)- the probationer under the prefect. According to the Treasurer, it is inflationary to spend $550m to provide 50,000 jobs; yet this Budget has to provide $700m for those who cannot find jobs. This Budget spends a mere $18m for special youth employment training programs; yet forgoes about $800m in tax revenue from companies. However, I must give credit where it is due and I must say that the Treasurer has absolved me and the honourable member for Oxley (Mr Hayden) and indeed everybody else from being too precise about these matters. In answer to a question at the National Press Club about the Budget, he said last Wednesday:
I do not retain as a matter of personal recollection every figure arising out of the thousands of pages of documents as a matter of personal recollection … If you look in 1 978-79 of course, the figures- whatever they have put down in any document- must be- if I use my own termssomewhat rubbery.
Not surprisingly, I must confess, the journalists at the National Press Club could hardly contain themselves. So the Treasurer continued -
– He bounced right back.
– I am reminded that he bounced right back. He bounced in further. I will quote him word for word.
– Is that the Pom hater at work?
-His family has taken to burying farmers now. However, I do not want to be distracted, so let me quote the Treasurer. He said:
Well they are for the simple reason that they must depend on a series of assumptions made during the course of 1978-79 as to things like growth, things like inflation, et al, over a wide area. But the figures I have in front of me are on the basis of estimates which will remain rubbery.
So, we have a rubbery set of estimates, a rubbery deficit- and a very, very rubbery Treasurer.
The centrepiece of this Budget, and the centrepiece of its deception, is of course its tax proposals. It must be emphasised again and again that this Government is not reducing taxation for the vast majority of Australian families; it is increasing it. Tax collections from individuals this year are estimated to increase by 17.2 per cent or $ 1,830m. In last year’s Budget the proportion of revenue collected as tax on individuals exceeded 50 per cent for the first time in Australia’s history; this year it rises to 53 per cent. The income tax paid by individuals is estimated to rise $121 per head of population- a rise of 15 per cent. Yet average earnings are expected to rise by only 10 per cent. The Budget papers admit that there will be some decline in real average earnings per employed person over the course of 1977-78; thus on the Government’s own admission personal incomes will fall and personal tax will rise. It would at least help the public to assess this Budget if the Government could make up its own mind about it, if the Prime Minister and the Treasurer could agree on the cost of their proposals. On the same day, in the same newspaper, the Prime Minister and the Treasurer gave conflicting claims of the cost of the new tax proposals. They varied by a mere $827m. As yesterday’s Sydney Morning Herald explained:
Mr Fraser is maximising the cost of the tax cuts by adding the cost of 50 per cent indexation to apply to the new tax scales from I July next year.
Mr Lynch is minimising the cost by subtracting the saving to the Government in the reduction of full indexation to 50 per cent on I July.
Well which is it?
Since the introduction of uniform taxation 35 years ago, successive Australian governments, Liberal as much as Labor, have committed themselves to the principle of equity and fairness embodied in the progressive tax system. The principle is clear and simple- the higher the income the higher the proportion paid in tax. There is no principle more deeply embedded in the Australian ethnic, the Australian sense of fairness and equity. This Budget strikes at that principle in a way no Liberal Government ever attempted in 23 years. The tax proposals represent the most massive redistribution of wealth away from middle income earners, the vast majority of taxpayers under $15,000 to the very highest income earners ever attempted in a single Australian Budget. Its other proposals compound the inequity and taken together make a deep and fundamental switch in the social and economic basis on which Australian society is founded.
When the effects of the changes to personal tax and the Government’s failure to index family allowances are combined, a family with three children on average weekly earnings will actually be worse off. Larger families will be substantially worse off. The Government is consciously and deliberately misleading the Australian people about the effects of the tax system. In the Hayden Budget, income was redistributed towards families by the introduction of tax rebates for children. Last year these rebates were taken out of the tax system and paid instead as family allowances. The failure to index the family allowances this year means that their purchasing power has fallen by 1 3 per cent. Taken together with the tax changes this reduces the income of many families. It means that unless family allowances are indexed next year all families with average incomes will be worse ofT. In any case, most taxpayers will be worse off next year as a result of half indexation.
While the relative position of families is being worsened, the well off are receiving large tax concessions. Someone earning $30,000 a year will retain an additional $800 in after-tax income. The Government has chosen to reward the rich for being wealthy rather than to increase job opportunities for the unemployed. Is this really what Australians want? Do we want the distribution of income to become even more unequal? Already the lowest 10 per cent of income earners receive little more than 2 per cent of total after-tax income, while the top 10 per cent receive 24 per cent. The effect of the Fraser-Lynch tax scheme is to increase injustice and inequality in Australia.
The Treasurer asserts that his proposals provide incentive to work. The incentive to work needed by Australia’s unemployed is the chance to work. For the vast majority of wage earners, the only way they can work harder and earn more is through overtime. They do not need incentive, they need opportunity. It is lack of opportunity, not lack of incentive, which prevents Australian employees working harder, working overtime or working at all. The Treasurer claims that the Government’s aim is to increase the power of individuals to decide how they shall spend their surplus incomes. Whatever may be said for this as a philosophy it does not describe what is happening under this Government- a government which is increasing personal tax and reducing wages. It is just not true that when a government vacates a responsibility it widens the choice of the individual. It is the governmentthis Government which makes every Australian taxpayer take out health insurance. This is a tax as surely as if it were in the Budget. It does not cease to be a tax simply because it is not mentioned in the Budget. Every State government forces employers to insure their employees against injury. Workers’ compensation is no less a tax by being outside the framework of a Budget. State governments oblige every vehicle owner to take out third party insurance. There is no choice about it; it is a tax. For governments and individuals alike the only choice in these matters is whether these taxes shall be shared fairly by the whole community or whether the burden will fall unfairly on individuals.
In providing a service or financing a function, a responsible government does not declare that it can spend the taxpayer’s money better than the taxpayer himself. The purpose of such spending is to provide for the community services that the individual and the individual family cannot provide for themselves or, if forced to provide them themselves, can only do so unfairly and inadequately. For the 12 months up to 1 October last, when the Government changed the Medibank arrangements, administrative costs for medical and hospital cover of the whole population was $5 1.8m. The administrative costs of Medibank which will now give medical and hospital cover to only one-third of the population, will be $54.8m in this financial year. The other two-thirds of the population will be paying well over $100m for private health insurance. That sum does not appear in the Budget. It will, however, come out of the pockets of taxpayers. They have been given no choice, no option.
Similarly, Labor’s national rehabilitation and compensation proposals could replace the other forms of compulsory insurance imposed by State legislation to provide incomplete cover for workers’ compensation and personal road accidents. These proposals would, on the official estimates tabled in October 1975, have saved the community between $325m and $375m in 1 975-76- $ 1 m a day. A much greater sum is now extracted from the pockets of employers and vehicle owners throughout the nation. Again, they have been given no choice, no option. Thus Australians are compelled to spend half a billion dollars a year on compulsory insurance which they would save if the Federal Government would only restore and implement practical reforms.
The Opposition spokesmen have been proposing responsible, selective, stimulatory fiscal policies, policies relevant to the needs of the Australian economy. Labor’s programs now have been revised to take account of the further distortions and destruction perpetrated by the Government in this Budget. Responsible economic management must begin with a commitment to reduce both unemployment and the rate of inflation. The Prime Minister and his Treasurer continue to claim that cutting inflation is their principal aim and that there is nothing substantial they can do about unemployment until this aim is achieved. In this Budget they have merely added to both problems. Inflation and unemployment are inter-related; they can be tackled together.
One reason why costs of production are high is that turnover is low. The lower the output of both goods and services, the higher will costs be because overheads have to be covered by lower sales. Also, the lower the output using existing productive capacity, the lower is labour productivity and the higher are unit costs. By deliberately retarding recovery the Government is causing costs to remain high. If total demand were expanded through responsible, careful stimulatory fiscal and monetary policy, employment could be increased as a result of lower unit costs without adding to inflationary pressure. Budgetary priorities must be changed. It is absurd to increase the incomes of the well off if recovery of consumption is sought, for the rich save a higher proportion of their incomes than low or average income earners. A high level of savings has been a factor contributing to stagnation throughout the recession. Also, the rich tend to spend a higher proportion of increased incomes on imported luxuries and overseas travel, rather than on Australian-made goods and services. To suggest that a reduction in taxes for the well off is a reason for postponing or refusing wage increase claims is equally ridiculous, for the benefits would go to high income earners and the cost would be borne by low and middle level employees.
Tax reforms should certainly be made but they should be concentrated where they will have maximum impact on reducing the rate of inflation, for example, through the effect of a reduction in indirect taxes on price indices, and on wages as a trade-off for wage restraint. It is surely unnecessary for me to repeat the need for increased spending on capital works. Such spending is in everyone’s interest. The efficiency and safety of public transport is improved, the availability of essential services is increased and employment in the building and construction and materials production industries is increased.
Every month this Government continues with its destructive, distorting and regressive policies it increases the difficulty of returning to economic stability and security. Imaginative, creative and pragmatic policies are required, free of doctrinaire constraints, which in fact give top priority to reducing both unemployment and inflation. Real progress would have been made in achieving these aims at the end of this financial year. This Budget assumes that there will be none. As long as these policies are continued, stagnation will be the hallmark of Australia’s economy.
In handing down its national wage decision yesterday, the Conciliation and Arbitration Commission also delivered its judgment on this Budget and the Government’s economic policies. Courteously, but emphatically, Sir John Moore, the President, exposed the misrepresentations of the Treasurer and exploded the myths in which this Government purports to make economic policy. In his Budget Speech a week ago the Treasurer stated:
There can be no doubt that, had the wage determination processes permitted real wages to decline in 1976-77, recovery would have been stronger and unemployment less.
Instead, so Par from having declined, as has been repeatedly asserted by our political opponents, real wages were actually higher at June 1 977 than a year earlier.
As the President of the Australian Council of Trade Unions has said:
Sir John Moore nailed this lie.
This is what Sir John said:
Using the CPI as the measure of changes in the purchasing power of money, on the most recent statistics published by the Statistician the following figures show that there has been some decline in real wages since May and June of last year.
The President pointed out that the consumer price index increase from June to June was 13.4 per cent; average weekly earnings rose by 10.8 per cent. Sir John Moore pointed out that there had been substantial compliance with the wage indexation guidelines. He refuted the Treasurer’s basic argument that wages were the chief cause of Australia’s mounting unemployment. He refuted the facts as stated by the Treasurer. He refuted his arguments in these words:
On all the evidence and argument before the Commission, it remains highly contentious whether employment recovery would have been greater or less merely if the Commission had awarded smaller wage increases during 1976-77. The causes of the present unemployment are complex. This is evident from the Commonwealth ‘s own submission.
Above all, the Commission rejected out of hand the attempt made by the Treasurer in his speech to off-load onto the Commission responsibility for the economic management of Australia. The Government itself has given the clearest of all possible demonstrations that it has no faith in the Budget, economically or politically. Less than 48 hours after its introduction the Government went on an entirely new tack industrial confrontation. The Government knew that the longer the public had to digest the Budget the more clearly people would see its deception and the more deeply people would realise its disastrous economic consequences. So there had to be a diversion- as quickly as possible, as dramatically as possible. The legislation devised for the air traffic controllers’ dispute was dusted off. The Minister for Employment and Industrial Relations (Mr Street) made a speech of one and a half minutes on a matter affecting the rights of 400,000 Australian government employees, rights which have been unquestioned for half a century. In the clearest most cynical way the Government gave its own vote of no confidence in a Budget less than two days old.
Speaking to the Budget a year ago I said:
This Budget- inadequate and misconceived as a response to our immediate problems, negative and destructive in its particular measures, class-ridden in the most profound sense- will drive us further apart from those nations where true progress and social justice are pursued.
Every word has been fully borne out and the proof is in the deepening recession, deepening unemployment, deepening despair and, worst of all, the deepening division in the community. The tragedy is that all these things are occurring not through unavoidable economic causes but through the deliberate policies of the Government. Yet the 1976 Budget was only a pale precursor of this Budget.
This year there is no need to make predictions because the Budget itself, the statements attached to the Budget, say exactly what this Budget will do. It will intensify and prolong the recession. It will increase unemployment. It will have little impact on inflation. It will make regressive changes in the tax system and it will reduce living standards. I foreshadow that an amendment will later be moved to condemn the Budget for these reasons. But above all the Budget will increase division within the community. This Budget does indeed set a new course for Australia- away from the road towards greater equality of opportunity which Australia has followed, however erratically at times, throughout her history. In the deepest sense, in the worst sense, this is a class Budget, a Budget to divide the nation. That is why, even more than for its economic stupidity, this Budget must be condemned.
- Mr Speaker, as usual the Leader of the Opposition (Mr E. G. Whitlam), strong in adjectives but weak in logic and certainly lacking in economic rationale, has suggested that there are problems in an area of his understanding rather than in the economic program that this Government had presented. Indeed, the product of his alternative suggestions is that there is no doubt that a $4,000m deficit is still the apple of his budgetary eye- a deficit which, in the exposition of the program he presented, would in no way contain the extravagence of the programs he pursued. That program, according to the way he expressed it, in no way recognises the need for the private sector to be given a stimulus and contains no reason for cutting back in the public sector. He set out once again a list of reasons why he would have persisted with the economic crisis into which he and his three successive Treasurers led Australia in spite of the consequences to the nation.
It is regrettable that neither in the Leader of the Opposition nor in those who sit behind him does there seem to be any understanding of what is without doubt one of the most significant and progressive tax changes introduced in Australia since Federation. There seems to be some belief in their minds that in some way it is divisive, yet the contrary is true. There seems to be a belief that by reducing the level of tax paid to a flat rate for all people earning up to $16,000, and after a concession in the form of the lifting of the base rate at which any tax will be paid from about $3,150 to $3,750, people in fact are to be taxed more. Neither in his logic nor in his arithmetic do those consequences flow.
The Leader of the Opposition opened his remarks by referring to an editorial in the Financial Review of Thursday, 1 8 August. Unfortunately he failed to refer to a comment in the Editor’s notes in the Financial Review of 19 August when the statement was made that the allegation in the editorial of the previous day of a shabby confidence trick was unfair and untrue. So neither in his exposition of the detail of the Budget Speech of the Treasurer (Mr Lynch) nor in his analysis of the comments made was the Leader of the Opposition accurate. I seek tonight not to condemn the Opposition, for I know that there is still much confusion between its two economic spokesmen -
-I beg your pardon, three. It is extremely difficult to know what their alternative program is. The one conclusion that can be reached is that without doubt the Leader of the Opposition was wrong in his assessment that there is a redistribution from middle income earners to high income earners in our tax scales. He was wrong in his assessment that by providing for an increased Budget deficit you would be able to stimulate employment. He was wrong in his assessment that by maintaining a stimulus to public sector spending you would generate in any way a consumer led recovery. He was wrong in his assessment of the basis by which the Budget maintains the Government’s program to reduce inflation and to stimulate the private taxpayer by returning to the taxpayer a benefit which at the moment is sadly lacking under the tax scales introduced by the last of the three Labor Treasurers.
The whole of our program already has demonstrably reduced the inflation rate in the Australian economy. Unfortunately, unemployment is still too high. We acknowledge that and we are taking positive steps in this Budget and through the efforts of my colleague the Minister for Employment and Industrial Relations (Mr Street) to generate employment opportunities. We have also said, quite firmly and avowedly, that until a financial incentive can be provided to the Australian worker the opportunities of encouraging fuller employment in this community are not likely to be realised. It is in those efforts and in that direction that I believe this Budget achieves so much. The Budget certainly sets firm parameters designed to counter continuing inflation. The reduction in the overall deficit from $2,740m to $2,2 17m and in the domestic deficit from $ 1,997m to $ 1,347m ensures-unlike the Labor Party’s program, which means that more money would have to be printed- that within the normal loan raising efforts of the Federal Government it will be possible to raise the money that is necessary to embrace that part of the deficit that is not covered by the normal tax program of the Government.
In those circumstances, of course, there is every reason to expect that interest rates will fall.
Yet the Leader of the Opposition spent about 5 minutes explaining to us that with a conservative monetary growth rate there were going to be tight money circumstances. I do not follow his logic and I certainly do not believe that to be true. I believe the conjectures that he applied to the budgetary program there, as elsewhere, to be totally false. Indeed, the reduction in the domestic deficit, which needs again to be paralleled with his $4,000m deficit, is a very firm indication to domestic industry, small business, large business, employers and investors generally that once again the product of an investment is going to generate a higher return than the product of money invested as money alone for, with a fall in interest rates, there is no doubt that much of the cost stimuli that have been involved in the last few years will be reduced. What we have also done, which again is unlike the program that the Leader of the Opposition has outlined, is continually reviewed the public sector expenditure items. Tragically once again tonight the Leader of the Opposition has run through a list of programs that he not only does not seek to contain but seeks to expand. He does not acknowledge that the range of public sector expenditure items was unfortunately the genesis of much of today’s inflation. He sees those expenditure items as necessarily continuing.
Our scrutiny of public sector spending has been designed to maximise efficiency in public sector spending and to reduce the deficit. We have achieved that without reducing expenditures across the areas embraced by the Budget in the more significant fields of health, welfare, education, transport and industry. There have been cuts, but they have been in areas in which we believe that the community advantage of having more money in the taxpayer’s pocket outweighs the disadvantage of having Big Brother in Canberra determining where the money should be spent on the taxpayer’s behalf. It is that fundamental difference in outlook that signifies the contrast between our approach and the approach by the Leader of the Opposition to the Budget introduced by my colleague the Treasurer last Tuesday night. Our intention remains to ensure that the public’s dollar is well spent and that the private citizen’s dollar is not taken from him other than in circumstances in which the community’s need genuinely outweighs that of the citizen himself.
It has been suggested that a higher deficit would have enabled an increase to occur in public sector employment and provided a suitable stimulus to the national economy. I do not believe that the Leader of the Opposition has demonstrated that to be true. I do not believe that he has demonstrated that by following that tack interest rates would be reduced. I do not believe that by following that argument we would overcome the high unemployment problem in Australia at the moment. However, it is true that allocations made within this Budget provide for a direct increase of $62 lm in the funds provided to the States and for an 18.1 per cent increase to $ 165.3m in the funds provided to local government authorities. That is again in marked contrast with the Labor Party’s program. Yet again tonight the Leader of the Opposition has demonstrated that his barb is in the Commonwealth directing where money is to be spent. He has much sympathy but little substance when he comes to look at the programs of either the States or local government. His objective is to provide Federal Government stimuli to generate employment. He fails to realise that in the application of our federalist program, which provides for an increase in the loan programs generally of $685. lm, there will be significantly greater moneys available for those other two tiers of government to apply in manners that they believe to be appropriate. There certainly is a capacity for the State governments and local government to extend their capital works programs if they believe that to be the appropriate decision for them to take. It is our belief, however, that employment can best be encouraged by stimulating return for work or the return to the individual.
Despite all the confusion that the Labor Party has sought to bring to consideration of the radically modified tax scales, there is no gainsaying that the application of a flat rate of tax to 90 per cent of Australia’s taxpayers is of tremendous advantage to this community. The basic features, of course, involve the lifting very significantly of the base figure on which tax will be paid. That must be of tremendous advantage to a large number of people. The Treasurer has assessed that something like 225,000 persons will be exempted from paying tax as a result of that. Significantly, many of them will be pensioners with small private incomes- persons who for the first time are coming into the means test free area of pensions and who, because they have some savings, are attracting under the Hayden scale a present tax burden and provisional tax for the year ahead. Those people henceforth will be exempt from the payment of personal income tax under this Budget. There is no doubt also that the other two scales- the surcharge of 14 per cent on incomes between $ 1 6,000 and $32,000 and of 28 per cent on incomes over $32,000- provide further incentive to persons to work harder, to be given promotion and to contribute to the economy. One of the sad things about the Labor Party in Australia is that it fails to accept that a profit motive is worthwhile and that a profit motive is important in giving the private sector the opportunity to employ persons.
I was interested in the Leader of the Opposition’s remarks about the extent to which he does not believe that a reasonable percentage of Australian revenue is spent in the public sector. He fails to realise that during the 3 years in which he was in office the percentage of Australia’s gross domestic product spent by the public sector rose from about 2 1 per cent to 30 per cent. That increase was a significant contribution to the higher deficit position and to all the flow-on in inflation that affected our community. It is our intention in the areas in which there seems to be some concern about the application of the tax scales to ensure that to the maximum possible extent there are no net detriment cases. I am concerned in particular to ensure that those who believe that there are disadvantages for them under the present scale examine the scale to see how it affects them. Certainly, under the scale that will be introduced from 1 February, the taxpayer in receipt of average earnings will save about $3 a week in tax. That is equivalent to a wage rise of $6.60 a week with indexation, to a male taxpayer with a dependent spouse. This is $6.60 a week with no impact on costs leading to higher prices. That must have a significant impact on the degree to which individuals need higher wages in order to offset inflation and on their preparedness to work. There is no doubt that the radically revised tax scale will be of tremendous advantage to this community.
There is no doubt that the program that the Leader of the Opposition has presented would not in any way contain inflation. He and, so it seems, those who advise him on economic matters question the whole of the values of tax indexation. It seems to me that what they have sought to do is not to try to devise a positive program to attack the inflationary circumstances that we are experiencing but rather to ensure that they are still justifying those old economic programs that they pursued while they were in government. That is just not good enough. There is no doubt that the Labor Party’s record in taxation is one of which nobody should be proud. The introduction of the false rebate system and the application of that false rebate system to taxpayers generally, as well as the implications that it had for so many people in areas of referred expenditure, need to be recalled in any analysis of the changes in the present tax scale.
I think I should say a few things about the application of this Budget to the rural sector. I do so because I think there are a good many people who feel that there are areas which they would still like to see covered and which perhaps have not yet been embraced. Perhaps the first thing I should say is that significant advantages will flow to all primary producers from the reduction in the rate of inflation and the changes in the personal tax scale. Secondly, many benefits will flow on from changes such as stock valuation adjustments and income equalisation deposits that we introduced earlier. There are so many areas- and I think now of stabilisation funds and programs for particularly disadvantaged industries- that some of them are not included in the Budget itself. I mention extension and research, promotion and extension for which this year an increase of approximately $10m more than the amount provided last year is provided. I refer also to the sums provided in the Budget to ensure that in the maintenance of fertilisers, in the superphosphate bounty and nitrogenous fertilisers bounty, there is a capacity for Australia’s agricultural output to be maintained and for that fundamental soil resource to be maintained to the degree that is necessary.
Some of the anomalies that appear in the way in which we add up the benefits to the rural sector of the Budget can best be seen in the wool industry and the dairy industry. With respect to the wool industry, in contrast to the actions of the Labor Party, this Government sought to the maximum to raise funds for the maintenance of a firm wool price reserve program outside the Budget itself. Hence, those large sums, previously directed through the Budget, are still provided but not in the Budget. They are raised privately and are operated in the normal commercial sector. But the guarantee that we have given the wool industry remains. There is no longer that threat of pulling out the underpinning that so prejudiced the wool market a few years ago.
Similarly, in the dairy industry we are moving towards the introduction of stage 2 of the new marketing arrangements. The only program that appears in the Budget in respect of the dairy industry is the cost of underwriting in the last financial year. Yet we have provided a continued underwriting for butter, cheese, skim milk powder and casein. Some underwriting has been done in conjunction with the States but it has been done significantly on the Commonwealth’s own behalf. The cost of that underwriting will be set out in next year’s Budget. But the program is firm and established. It gives a capability to Australian dairy farmers together with an assurance that the Government stays behind them in this time of marketing change.
In respect of rural adjustment there has been a suggestion that the Commonwealth in some way is moving to adjust all Australian farmers out of the industry. What utter nonsense. Have those commentators who put forward this view forgotten that earlier this year we changed the whole structure of the rural adjustment scheme? Those two programs, for example, in the dairy industry and the beef industry which will provide carryon funds to enable farmers to stay on their holdings and to receive low interest advances until such a stage as there is an upturn in their returns are embraced within the rural adjustment scheme.
Farmers are eligible to receive the unemployment benefit. This benefit is not contained in a specific item in the Budget, but again it is present. For the beef industry, hard hit as it is, there is significant assistance within the Budget designed to help. The amount of money allocated to the disease eradication program has been significantly increased on the provision last year. For those producers in areas where there is a capacity to take advantage of compensation, the Budget provides for a way for them not only to improve their herds but also to improve their cash flows. But there is a number of problems in respect of cash flows to the beef industry. We have been examining these problems to try to ensure that instead of introducing hastily a program that might not embrace the best means of helping the industry we assist the industry together with our commitment in the upgrading of the Australian Meat Board through the Australian Meat and Livestock Corporation and the progressive introduction of classification. We assist through the Rural Bank also. All of these factors are there. The legislation that will follow during this session is intended to spell them out in detail.
This Budget is constructive, positive and forward looking. It is a Budget whether for the rural sector, or for the community at large that I believe will reduce inflation and will stimulate the capacity of individuals to spend more money because if puts more money into their pockets. I totally reject the concept that the Leader of the Opposition has advanced, that is, that in some way the Budget is deceiving the Australian public. That view, like the Leader of the Opposition himself, I am afraid is full of wind and fury but signifies little.
– Notice has been received from the Leader of the House that at the next sitting he will move:
That, unless otherwise ordered, Government Business shall take precedence of General Business on each day of sitting until the Appropriation Bill (No. I ) 1977-78 and Appropriation Bill (No. 2) 1977-78 have passed all stages in the House.
– Notification has been received from the honourable member for Oxley (Mr Hayden) withdrawing the notice of censure which stands in his name as Notice No. 1, General Business.
– I wish to repeat two points that were mentioned by the Leader of the Opposition (Mr E. G. Whitlam) in his attack on the Budget this evening. He said:
It is irrelevant to the economic circumstances or the current economic needs of Australia.
In a colourful expression, he said:
What is done in this Budget is to apply the classical cure for an overheated, booming economy to an economy which is foundering, an economy which is not overheated, but frozen stiff.
The Minister for Primary Industry (Mr Sinclair), who has just spoken, tried to indicate somehow that there was virtue in the level of this year’s deficit being less than the deficit of last year. Budget Statement No. 1 entitled ‘Summary of the 1977-78 Budget’ shows that the actual deficit for 1976-77- here I am talking about the internal deficit and not what is called the domestic deficit- - was $2, 740m. That document also shows that this year the deficit is some $500m less at $2,2 17m.
Let me take some figures from the White Paper on National Income to indicate the total outcome of the economy last year. Presumably the Budget is supposed to have some beneficial effect upon the result. As a sort of parameter, the White Paper shows the gross domestic product at about $81 billion. The gross domestic product can be expressed in percentage terms. But we must remember in that case that any additions cannot exceed one hundred. It is of interest to note that one per cent of the GDP in round terms is $800m. This is about the projected expenditure on the unemployment benefit this year. In a sense the unemployment benefit is a transfer, mostly via the tax process, from those who are working and those who have incomes to those who are unable to get employment. Last financial year, of the $8 1 billion which made up the total GDP $46 billion or 56 per cent accrued to persons as wages, salaries and supplements. In the previous financial year, 58 per cent of the total GDP had gone to wages, salaries and supplements. In that same period, $25,8 18m, or 32 per cent, went to enterprises as gross operating surplus as against at least 30 per cent in the previous year. So, one effect of last year’s Budget was to reduce the share of the total gross domestic product going to wages, salaries and supplements by two per cent and to increase by the same percentage point the amount going to enterprises as gross operating surplus. This was one effect of last year’s Budget. If it is thought that this change is beneficial, I hope that someone on the other side will get up and argue the case.
I agree with what was said by the Leader of the Opposition this evening when he quoted Mr Justice Moore’s judgment in the latest national wage case. For anybody to seriously assert that unemployment will be gravely affected because the total wage bill of this country is increased by 2 per cent surely is economic nonsense. Yet that was what the Treasurer (Mr Lynch) was prepared to enunciate. Does anybody on the Government side of the House believe that it would have been a good thing to reduce wages? Real wages, in fact, have been reduced but nobody has been game enough to suggest that nominal wages ought to be reduced. It seems to me that that is almost the logic of the Treasurer at the moment.
I put a simple economic proposition. As the Leader of the Opposition said, this Budget is irrelevant to the current economic circumstances. I am not too sure myself- I have said this over and over again- whether Budgets are as relevant to the total economic circumstances as we sometimes believe. I think that too much is asked of Budgets and too little resort is given to things which ought to be done outside the Budget. But at least this seems a fundamental enough proposition. I support it by quoting again from the Budget Paper on National Income and Expenditure which states that unemployment in Australia is rising because total employment is not rising. I think the sooner we come around to that realisation the sooner we will get down to the elements of the trouble. Again, that Budget paper stated:
Total employment showed virtually no change in 1976-77 . . .
This was despite the fact that something like 160,000 more people would have liked to work. In fact, total employment showed no change in 1976-77 following a fall of about one-quarter of one per cent in the previous year. So we have had almost no increase in total employment in Australia for nearly 2 years. How can one expect an economy to boom or to respond in that sort of situation? We all talked about full employment years ago. I understood that full employment always meant a job available for everyone able and willing to work. I qualify that by saying that full employment has never meant and cannot mean always the same job in the same place. In this country- this is shown in the famous table No. 2 found in the Budget papers- at the same time as we have the high level of unemployment we have areas where there are shortages of skills. It seems to me that we have to match the people who are out of work with the jobs which still need to be filled. This is not an easy task.
I sometimes think my own side is a little bit glib when it suggests we can easily find 50,000 new jobs. We can do that but it might not be the best means of usefully utilising the total resources of the community. At the moment we are transferring something like one per cent from those who are fortunate enough to have work and incomes to those who have not. That is a pretty costly process. Surely we are not getting as much value for the $800m as perhaps we ought to get. I do not support the thesis that the majority of people who are drawing unemployment benefits do not deserve it. I believe that they are circumstantially afflicted by the malaise of the economy. At least we are humane enough to acknowledge that they should not starve. Surely in the long run- my colleague at the table, the honourable member for Port Adelaide (Mr Young) knows this- there can be less reliance on manufacturing as a percentage source of total employment.
The Government has cut down on government activity. The Budget papers show, as my colleague the Leader of the Opposition indicated tonight, that real capital expenditure on the part of the Government is declining. Surely nobody thinks that we have enough hospitals, schools and homes for the aged and that it was a good thing to cut down on provision in that area. Maybe the theory of the Government was that it could cut down there and the private sector would take that up. That is not what has happened. Again, as the Leader of the Opposition indicated, the Government is living on false economic theories at the moment. I think that some honourable members opposite might take a little more realistic approach to things both in New South Wales and Victoria now that they have seen the redistribution of electoral boundaries. That might put their minds on more worldly things rather than abstract theories. It has been said to me that I was the first one to say that one man’s increase in wages would mean another person’s unemployment. There is a certain sub-stratum of truth in that but it is not a philosophy to hide behind forever. Surely the reality is that people are being educated in our schools today in the belief- we are giving them higher, more costly and I hope more qualitative education than ever before- that when they finish there will be a job for them. That is no longer true. What can be more devastating to the foundations of a community when a large part of its people have never worked and potentially will never work? This is the situation unless we make drastic structural changes. This Budget does not grapple with that situation at all.
I have said before that I would prefer to have inflation rise by a point or two and unemployment drop by a point or two if that is what has to happen. Always in Western democratic economies the difficulty is to get full employment or near full employment without pressure of inflation at the same time. We have both of these. Inflation is higher than we would like and unemployment is much greater than we desire. This Budget cannot reach down to the elements of the situation. The Minister for Primary Industry (Mr Sinclair) who spoke earlier referred to reducing the proportion of the gross domestic product spent at Government level. There has been a lot of reference to the deceit of this Budget. I am not sure whether it is deceit or clever camouflage. I am a little kinder, sometimes, than other people.
On today’s figures- I understand Budgets are written in terms of current prices- the total expenditure projected in this Budget is $26, 656m which is near enough to one-third of the total gross domestic product. It will not be that figure by the end of the year because inflation will be at least 10 per cent. So the 33 per cent potential will turn out to be something like 30 per cent potential. When one looks at the anatomy of the Budget one finds that over two-thirds of total Federal expenditure is accounted for by education, which takes 8.9 per cent; health, which takes 10.6 per cent; social security and welfare, which take 27.2 per cent, and payments to the
States which take 22 per cent. That represents 68.6 per cent of the total Budget expenditure this year. I believe there are groups in the community who think that those sums are inadequate for the needs that have to be encompassed, but at least this does highlight the rigidity that is built into budgets by the inheritance of the past- the things we have contracted to do which limit our ability to move very fast in the future, at least in respect of budgets.
It is for that reason that I believe it is time we acknowledged that we cannot expect much from a great event on the second or third Tuesday in August every year and assume that once it is out of our hair the economy is set fair for the rest of the year. That is nonsense. To set the economy fair in Australia is going to take more than a year, more than two years. It is probably going to take a minimum of five years. Underneath it all, we still subscribe to the need for full employment, but we have to acknowledge that people are being put through our education system at the moment and turned out with capacities that nobody wants. That is sad, perhaps, and I do not believe that the only purpose of education is to equip people to do a job, but most of us do need to earn an income by being employed by somebody else. Not enough people are coming out with the sorts of skills needed in today’s changing society. Too many are coming out with skills that might have been useful in the post-war reconstruction era but are not required with the technology of today.
This Budget reaches nowhere in that area, and the more quickly this House gets down to some of the fundamentals the better. We have had a plethora of reports. The Borrie report dealt with our likely future population. Surely it will have some impact on employment for the future and on demands for education in the future. The Coombs report dealt with changing the machinery of government. To a great extent, it contained a lot of high nonsense from some of its contributors who claimed to be expert in things about which they know nothing. I do not know how those who simply ask a question or two here and there know who were good or bad Treasurers in this country in the past, but there are some very learned characters who believe that they do know. Then there was the Jackson report which, if I can epitomise what it said, stated that unless manufacturing industry finds export markets in the future manufacturing will be a declining part of the total economy. I find it hard to know the areas of manufacturing in Australia which are likely to be increased export earners in the future. Perhaps the problem will be to live with a smaller proportion of total activity in manufacturing. But what will we do then with the people who would have been absorbed in manufacturing employment? Where are they to go? At the moment, I do not think that anybody in Australia has the answer to that question, but we can haggle about it.
I will take another opportunity to talk about the taxation system. Tonight I have tried to indicate quite starkly that, in my view, last year there was an adverse shift in the shares of the Australian economy going to the various contributing parts. I might conclude by asking honourable members to look at the first table on page five of the national income paper. It shows that, as far as the total performance of the economy is concerned, the best year of the last five years was 1973-74, the year of the first Labor Budget. I am pleased to have it regarded as a Labor Budget rather than have a name attached to it. It secured a better distribution of the total resources and won this party an election in May 1 974.
Mr DEPUTY SPEAKER (Mr MartinOrder! The honourable member’s time has expired.
-Few governments in Australia’s relatively short federal history have come into power with such a thoroughly unsatisfactory economic situation before them. Despite that fact, this Budget does assure Australians of future solid progress towards economic and social objectives, laid down by the Government over the last two years and enunciated in particular by the Prime Minister (Mr Malcolm Fraser) during the 1975 campaign. Perhaps the most telling comments I could use to introduce this Budget were contained in the report and financial statement of the Reserve Bank of Australia issued on 30 June last. The bank stated:
Although the process of redressing imbalances in the economy continued in 1976-77, the extent of the damage suffered by the economy has been such that much remains to be done. The private sector, as well as government, will have a role in restoring sustainable growth, price stability and full employment; this is not a simple process, and the goals are unlikely to be fully achieved quickly. The emphasis on ending the inflation needs to be maintained because continued inflation is incompatible with a healthy Australian economy. The return to economic prosperity will be quicker and sounder if overall economic policy continues to be firm and if there is continued improvement in the balance between fiscal and monetary policy.
The objectives of the Government can be best defined in terms of three specific goals. Firstly, we intend to maintain the trend to lower inflation. Secondly, and this is dependent upon the achievement of the first goal, we must promote moderate and non-inflationary growth in order to create jobs and reduce unemployment. Thirdly, this Budget will move Australia further towards achieving those goals and, in so doing, it will build on the foundation laid by last year’s Budget.
Despite the very real difficulties we have faced in the last financial year, gross non-farm product rose by some 3.5 per cent whereas in the last period of the Whitlam Administration gross nonfarm product did not increase at all. Excluding health and medical services, inflation has also fallen from 15.4 percent in 1975 to 10.2 percent in 1976-77. We should never forget that in the last year of the Whitlam Administration the rate of inflation was some 17 per cent. The strategy enunciated by the Government since it came into power is to establish sustained economic growth and the conditions which are required for that strategy are lowering inflation, reducing the Budget deficit, and keeping Budget outlays within zero real growth.
It is a primary objective of the Government to ensure that there is efficiency and economy in the management of all government spending. We have seen for too long the attitude that the funds used by the Government can be taken from the people regardless of the cost to the man in the street. It is our policy, and the people of Australia expect us to carry it through, that every dollar taken from the elector must be spent, efficiently and effectively. In addition, it is our objective to restore incentives for initiative and enterprise by lowering the rate of taxation. There is no question, and no member of the House should be under any illusion on this point, that the Government has kept faith with the Australian people and, despite the very real difficulties related to the size of the deficit, introduced taxation reforms over the last two years in the range of $3,000m in terms of lost revenue. In view of the size of the deficit at the moment, it could be said: Why has the Government done that? Why did it not leave things as they were in order to have no deficit at all? The reality, of course, is that with an economy which so desperately needed an infusion of confidence, the average person, whether he is an employer or an employee, must be helped to believe that at least he can take home more than 50 per cent of every dollar he has earned. We have done better than that. We have ultimately reached the point where it is possible to plan for a consumer-led recovery. In addition it is essential that we revitalise the private sector. In addition to taxation reform, we have entered into a series of measures over the last two years directed at that objective. We must also restore Australia’s international competitiveness by job creation initiatives, lower inflation, lower taxation and wage restraint. They are obviously essential prerequisites to enable the Government’s strategic appreciation of our economic difficulties to be put into a realistic framework and carried through. Despite the difficulties, the Budget initiatives have been quite extraordinary. We have reduced the deficit by some 19 per cent over the last financial year. Again, I emphasise that we inherited a situation in 1975 in which the government deficit was running at $4,700 billion. It is now down to $2,200 billion, a remarkable achievement with which the Government can be very satisfied. We went to the people at the last election promising a government for all Australians, regardless of where they live, regardless of their income, regardless of any other factors. We are not a government of social division, unlike the Australian Labor Party. We are a government of unity. In that regard despite the difficulties, government spending on education is up 10 per cent on the expenditure for last year. Spending on health is up 11 per cent. For social security and welfare, government expenditure has increased by 13 per cent. Housing and community development has also been considered seriously in the Budget. Expenditure on State and local government has increased by 14 per cent. The Government’s economic strategy has been directed at ensuring that some programs are either transferred back to the States- or through our taxation reform we have been able to discontinue certain programs in the belief that it should be the right of every citizen to decide how best his income should be spent. We fundamentally reject the proposition that government should be all pervasive, that it should be involved in every aspect of the life of the Australian citizen. That is not the democracy we seek! That is not freedom. Freedom, as we see it, is a state in which every Australian should be given the opportunity to develop to the ultimate extent possible with the minimum of Government interference.
Of course, there are many people in our community who for various reasons are unable to do this of their own volition. Of course, it is the responsibility of the state to ensure that they are given the opportunities to live a full and productive life. But we utterly reject the concept that every citizen should be given excessive State support continually. It is obvious that a community of some 14 million people cannot be expected to support such a welfare state indefinitely. With that objective in mind, we have ensured that all essential social welfare programs have been continued. All welfare programs have been linked in with indexation so that when the consumer price index increases due to inflation people in receipt of the welfare dollar lose nothing. This is an achievement which has never been introduced by an Australian Government before. It is one for which this Government has every reason to be proud.
I turn now to the question of taxation reform. Here, of course, the Government’s record is second to none. Let me explain the details: The new and simplified taxation system introduces a basic rate of taxation for the vast majority of taxpayers. No tax on income is payable for those who earn less than $3,750 a year. Of course, that covers the vast majority of pensioners. A standard rate of taxation of 32c in the dollar has been introduced on all incomes over $3,750. A surcharge of 14 per cent has been levied on income between $16,000 a year and $32,000 a year and a surcharge of 28 per cent is levied on all income over $32,000 a year. The result of this is that the vast majority of the Australian people have had extremely large reductions made in their rate of tax. It also means that those on the lower scales of income pay no tax. The Australian system of personal income tax with these reforms is now without doubt one of the most advanced in the western world. Let us remember that this has all been achieved despite the fact that we have foregone voluntarily some $3,000m in lost revenue. This is because we believe it is fundamentally important, even in these difficult times, that the people of Australia should be made to believe that this Government is concerned for their welfare. This Government believes that individuals are ultimately the best people to decide how to look after themselves, to spend as they wish and as they are now able to do to meet their desires and needs. Obviously, this could not be achieved when there were onerous taxation rates which had been in existence for over 30 years. It is also worth remembering that in the 3 years of the Whitlam Administration, no serious attempt was made to change the taxation system. After all, why should it have done that? The taxation revenues from the Australian people rose in excess of 100 per cent. That is not a bad record for 3 years. As opposed to this, we have voluntarily given up $3, 000m in revenue to introduce taxation reform. Despite the Jeremiahs in our midst, there were no increases in indirect taxation introduced in the Budget. Mr Deputy Speaker, I seek permission to incorporate in Hansard a table which gives the tax payable at selected levels of taxable income under indexation and proposed scales compared with tax at 1976-77 rates.
-Is leave granted?
– I have not seen the document.
– I think that the honourable member who was previously at the table gave approval for it to be incorporated in Hansard.
– Thank you.
-Is leave granted? There being no objection, leave is granted.
The table read as follows-
-Thank you. I turn now to the question of wage restraint. It has been said this evening, especially by the Leader of the Opposition (Mr E. G. Whitlam), that the Government is barking up the wrong tree. In his inimitable manner, he has quoted out of context various comments made by justices of the Conciliation and Arbitration Commission and others on the question of the Government’s attitude towards wage restraint. We believe that the grave imbalance between real wages and productivity resulting from the 1974 wages explosion still remains Australia’s major economic problem. Anyone who wants to study the figures can see that situation demonstrated. We have persistently recommended to the Commission that serious consideration should be given to the need to increase productivity, to increase the share of profits to the private sector and to limit further increases in wages. Regrettably, at this stage our attitude on that matter obviously has not been totally accepted. But the fact remains that our policy is right. A stage has been reached at which it is no longer satisfactory for the employer to take on additional labour if he does not feel that the unit of labour will return him a satisfactory reward. Obviously, therefore, the correlation between higher wages and productivity per unit of labour is very close.
I wish to return again to the question of taxation. It has been said, and the ALP Perth Conference emphasised once again, that the ALP is a party of high personal taxation. I suggest that members of the Labor Party read the report of the Carter Commission presented in Canada in 1966 and the findings of the Asprey Report in Australia. The Carter Commission stated:
Lower marginal tax rates should make profitable investment more attractive, increase labour force participation rates and increase labour, managerial and professional effort, lower marginal rates should consequently enhance the rate of economic growth in Canada.
The words ‘and in Australia’ could easily be added because the principles are identical to both countries. I turn now to the alternatives that the Labor Party has put forward as the Opposition’s economic strategy. It has suggested that the Government must commit itself to lowering interest rates. We are so committed when the Australian economy is able to withstand it. The Opposition has suggested that we should not increase personal tax. As I have stated already, we have introduced personal taxation reform which is second to none in the history of the Australian Federation. Of course, the third point is that the Australian dollar must be protected against devaluation. Again, it is rather simplistic to say that because it is quite obvious that the protection of the Australian dollar is a major element of any government policy. The question of increased capital works, by government has been mentioned by a number of Labor spokesmen and deserves serious consideration. The difficulty we face is the deficit. There is only one way to finance capital works, that is, by increasing the deficit. The only way to finance a deficit is by either foreign or domestic borrowing. I submit that in every case that results directly in higher inflation. Foreign investment in Australia means higher liquidity, which ultimately results in an inflationary situation. Similarly, if we were to enter the domestic market and compete with the private sector for available funds it would result in forcing up interest rates, which again is not the objective of Government policy.
I now refer to unemployment. As part of its support measures the Government has introduced the most effective Community Youth Support scheme. This will be without limit, in terms of the next financial year, funds will be made available to employ as many young people as necessary under this program. Already 80,000 young Australians have been assisted under this program. I share with honourable members on both sides of this House a very real concern for the young people of Australia who are leaving school and cannot find adequate employment opportunities. The fact of the matter is that 30 per cent of the total unemployed falls within this category. It is obviously fundamentally important, that governments should have policies which include programs such as the community youth support scheme and CRAFT programs which are directed specifically to assisting those young people who do not have adequate opportunities for employment.
I wish to quote comments made by the honourable member for Oxley (Mr Hayden) in 1975 when, as the then Treasurer, he delivered his Budget. He stated:
In the context of an economy beginning to pick up a deficit of the order initially projected would have been a recipe for accelerating inflation . . . today, it is inflation itself which is the central policy problem. More inflation simply leads to more unemployment.
Obviously, those words were correct then they are still correct now. It is interesting to see how when he was in government the honourable member was faced with the realities of life but when in opposition he is apt to get carried away with figments of the imagination. The attitudes which the honourable member for Oxley enunciated then are fundamentally sound today, but what he is now saying is utterly inconsistent with the economic realities we are facing. As I said, there are only two possible ways of financing Labor’s proposals for increasing the deficit, both of which the Reserve Bank, the Australian Financial Review and, indeed, all reputable economists, agree are inflationary. By printing money or by selling bonds both are inflationary. In practical terms, therefore, it is difficult to see how the neo-Keynesian approach adopted by the Opposition would work in the immediate to longer term under present Australian conditions. Increased government spending and a higher government debt would lead to some immediate increases in demand on resources, with a probability of temporary easing of some unemployment. But how would the Government pay for these effects and what would be the results? It is open to the Government to borrow more to finance its debt. The result of that would be higher interest rates because of the extra pressure on the loan market. Further consequences would be that fewer people would be able to buy houses, with consequent unemployment in the building industry. Another consequence would be higher interest rates for business, causing cost increases, less investment, more closures, fewer jobs and, indeed, further inflation. Of course, the Government could simply sell Treasury bills to the Reserve Bank and ask the Bank to provide more money for the Government. That trick was perfected by the honourable member for Lalor (Dr J. F. Cairns), when Treasurer, in an heroic gesture for his ‘new society’. But the result of that would be more money without matching productivity, resulting in more inflation. More inflation would mean social injustice, higher prices, reduced business investment and, again, fewer jobs. We have seen that too often; we have seen the social and economic cost since 1 974.
Higher taxes should, perhaps, be mentioned as another strategy to stimulate the economy, which has been recommended by the ALP at Perth! But again, it would be absurd to expect such a strategy to reduce prices and create jobs. The ALP has assumed that higher deficits lead to increased spending, therefore to increased productivity, higher gross domestic product and more employment. It accepts the Keynesian emphasis on spending and demand as the prime motivating force in the economy but they are not the only ones. Unfortunately, what was suitable for Great Britain in the days of the Depression will not work in Australia today.
The Budget we have enunciated sets the nation first. It recognises that there must be a fair sharing of the burdens by all Australian citizens and that they must all be prepared to accept the responsibilities as well as the ultimate rewards. Only through the Governments strategy will we find the ultimate solution to our problems.
-Like everybody else, I have watched very carefully the various criticisms levelled in the media, et cetera, against this Budget. These criticismsquite violent criticisms- continue until this day. For example, the very latest controversy surrounds the extraordinary disagreement between the Treasurer (Mr Lynch) and the Prime Minister (Mr Malcolm Fraser) as to how much the tax cuts are going to cost the country. We have the extraordinary spectacle of the two men quoting figures so different that, in effect, the Prime Minister claims that the cost will be double what the Treasurer claims it will cost. However, one of the most interesting criticisms I have read was written by Kenneth Davidson, Economics Editor of the Melbourne Age. I shall quote one or two points he made in this criticism and then go on to deal with those points. For example, he stated:
The tax concessions favour those who have jobs, particularly those on high incomes, who have hardly been touched by the worst recession since the 1 930s.
It provides little hope for the unemployed and. even worse, it lays the seeds of more instability in 1 978-79 so that the prospect of reasonable growth and job creation must be put off until 1980.
Mr Fraser has created a horrendous budgetary problem for himself or whoever forms the Government next yeat.
I think that whoever read that statement would realise how very true it is. There is no doubt that the so-called tax reforms introduced by this Government will benefit the people in the high and higher-middle income brackets, and that they are basically to the detriment- particularly when one takes into account the petrol price increases- of the people in the lower-middle and low income brackets.
We must have a very good look at the petrol slug because this Ilea gallon increase is the first of such increases which the Government will introduce each year from now on. In other words, the Government has capitulated to the oil companies for world parity prices. Paying world parity prices will mean that we will be paying the type of prices for petrol that are paid overseas; that is, $2.40 a gallon in Italy, $1.80 a gallon in Germany and Switzerland and $1.60 to $1.80 a gallon in the United Kingdom. This is what is ahead for the Australian motorist and the Australian wage earner. The reason for this is that the Government has been stood over by the oil companies, which have stated quite clearly that they will not continue prospecting for oil on the North West Shelf unless they receive world parity prices. Finally the Government has given way to the oil companies in this regard and the people are going to pay for it. As I said, the increase this year is 11c a gallon and that is what we can expect next year and the year after. We will have steady increases in the prices of petroleum products, which must increase inflation and must create a greater demand for wage increases. So Kenneth Davidson’s point that this Government’s tax concessions will benefit the people on high incomes is correct. A slug in petrol prices simply means that an indirect tax is being imposed, which hits the little man equally as hard as it hits the big man.
Furthermore, Kenneth Davidson made the point that we cannot expect any improvement in the unemployment position. I shall cite the figures for my area. In Blacktown, unemployment has increased by 35 per cent and in Mt Druitt by 54 per cent since this Government took office. Furthermore, about 48.5 per cent of those unemployed are young people. Yet the Government flatly refuses to introduce any programs which involve investment in the public sector. I return to what Kenneth Davidson had to say. He said:
As unpalatable as it may be to Mr Fraser, a major reason why the recession has been prolonged in Australia is because Government spending, particularly capital spending, has been curtailed. This has been in stark contrast to other western countries where it has been rising strongly in real terms to take up the gap left by the failure of private spending to rise sufficiently to create new jobs.
One of the best examples of that is what was done by the Prime Minister’s buddy, Lee Kuan Yew. Lee Kuan Yew takes the opportunity when there is a world trade recession to get on with spending in the public sector. This is the time when he is putting into effect his new housing schemes, building new hospitals and schools and providing jobs for his people. The same thing occurs in Switzerland. This is the time when Switzerland invests in the public sector by renovating all those glorious historic buildings in that country. This also is what is happening in Germany today, Germany too is investing in the public sector. So any country with a worthwhile economic policy realises that it must take up the slack by investing in the public sector and creating employment. Of course, this is what we should be doing too.
Time and again the honourable member for Robertson (Mr Cohen) and other honourable members have raised the necessity to create employment. Time and again we have raised the issue of the nearly $800m paid by way of unemployment benefit for which the general community gets no return. We can no longer say as we could in the past that for every person receiving the unemployment benefit the country is getting something worthwhile in return. Until we are prepared to pay award wages, until we are prepared to give people employment opportunities, to build the necessary community facilities, unemployment will continue to grow. This is one of the greatest needs not only in my area and in the Robertson electorate but also throughout Australia, although it applies particularly to those areas which have large unemployment in unskilled and semi-skilled occupations.
With regard to youth employment, the honourable member for Bradfield (Mr Connolly) mentioned the community youth support scheme. It is peanuts. It is giving very little benefit to the community. It is oriented to teaching young people how to find jobs and not to providing jobs for young people. The Budget allocates funds to provide 8,000 jobs under this new scheme whereby the Government pays the employers to employ a young person- 8,000 people under the age of 24 years when there are over 150,000 young people of that age group unemployed throughout the length and breadth of Australia. So honourable members can see how very little the Government is doing towards creating employment opportunities. It is well and truly time that we introduced an employment policy which will give emphasis to providing job opportunities for our youth and give emphasis to providing job opportunities for the mass of unemployed which today stands at something like 320,000 and is expected to rise to as high as 430,000 next year. No wonder the Government is backing away from an election. The people realise only too clearly that this level of unemployment is going to be reached. Any honourable member who sits in his electoral office today and has parents coming to him concerned and worried about how young people are going to get a job in the new year knows that this Government cannot avoid its responsibilities because the people know how tough it is going to be for the youth of the future.
I quote further from what Kenneth Davidson had to say. He said:
On interest rates, Statement 2 of the Budget paperswhich tend to be a Treasury evaluation rather than a Treasurer’s expression and therefore should be taken seriously- appears ambivalent.
On the one hand it invites the reader to expect a reduction in interest rates but then it points out that the money supply growth target will be eight to ten per cent ( less than the rate of inflation) and as a consequence ‘some increase in the velocity of circulation is expected ‘.
Usually velocity picks up in response to a squeeze on the volume of money and this suggests upward pressure on interest rates.
A fair guess is that interest rates will come down by Government edict before the election, whenever it is held, but speculators would be wide-
I think he means ‘wise’- to take their capital gains quickly as the problems now looming for the 1978-79 Budget suggest that any fall in rates will be temporary.
In other words, the Government if it is looking for an election in December will reduce the interest rate on Commonwealth borrowings in October knowing that after the election the pressure of monetary forces will then force interest rates up again.
– What election?
– I quite agree- what election? If on the other hand an election were held in May- and since the redistribution of boundaries I realise that the Government is getting a little concerned about holding an election and is beginning to change its mind, particularly the National Country Party component of the Government which will find itself rather decimated after this election- the Government strategy is still clear. It intends to reduce arbitrarily interest rates prior to an election and then allow them to increase immediately the election is over. How dishonest can a government be?
– The Government will not be able to do that as it will not be in power.
-The honourable member for Port Adelaide points out that this Government will not be in power. I believe that that will be the case and that this is becoming more evident as the voice of the people is heard. Another point which should be looked at is the 40 per cent investment allowance which is costing $500m a year. I have been speaking tonight about employment opportunities. The fact is that the $500m a year which goes into the investment allowance is reducing employment opportunities. The honourable member for Port Adelaide would know only too well that the more capital investment which goes into automation in industry- and that is what the investment allowance is all about- the less jobs there are throughout industry. Although the Government says that its policy is directly aimed at increasing employment, its whole strategy is aimed at reducing employment opportunities. Its strategy must lead to massive unemployment of up to 7 per cent of the work force at the beginning of next year. Incidentally, some places such as Blacktown already have up to 12 per cent of their work force unemployed. This is an extraordinary circumstance. It is interesting to read the Treasurer’s assumptions at page 33 of his Budget Speech where he says:
Private consumption expenditure is expected to grow at a moderate rate over the course of 1977-78, this being accompanied, as in 1976-77, by some decline in the saving ratio.
The facts of life are that people today are saving more assiduously than they have ever saved in their lives. This is simply because of a feeling of insecurity. They know only too well that they could be thrown out of their jobs tomorrow. Accordingly, there is a considerable investment in Australian Savings Bonds, deposits in building societies, term deposits with trading banks and savings bank deposits.
This, in turn, is accompanied by the Government’s restrictions on lending. Today a person could go to any bank manager who would say that his discretionary limits have been largely withdrawn by his head office. He has to send everything to his head office for approval. He can no longer lend for housing in the way that he could lend in the past. He would say how interest rates must come down if private industry is to have the opportunity to develop. Anybody here who is a businessman would hesitate to invest in any new project with the cost of money as it is today. I repeat, any bank manager would say straight away that interest rates must come down. There must be a lifting of Reserve Bank restrictions on lending in all spheres, particularly with regard to industry, otherwise the restriction on employment will continue throughout the whole realm of society and the economy. Yet this Government stated:
Private consumption expenditure is expected to grow at a moderate rate . . .
How can it grow at a moderate rate when, at the same time, the banks are restricting their lending and, accordingly, directly stopping that growth occurring? The assumptions in the Budget Speech state:
The recovery in overseas economies will continue at a steady, albeit moderate, rate and Australia’s balance of payments will strengthen over the course of 1 977-78.
Yet we have the spectacle of the recent devaluation of the Australian currency. Furthermore, the Australian dollar is still tied to the United States dollar which is falling dramatically in overseas markets, particularly in Berne and Bonn in Germany. The value of the Australian dollar is falling with it.
– That is the position, my friend. There has also been a recent devaluation. The assumptions in the Budget also state:
Equally, exclusion from award wage adjustments of changes in the consumer price index attributable to devaluaton and oil price increases is essential if the desired effects of these changes are to be fully garnered.
In other words, the Government accepts the assumption in this Budget that there will be further devaluations with the result that the cost of imports will increase and inflation will be given further impetus. At the same time, the Government will not pass on the effects of devaluation in the consumer price index in the indexation of wages nor will it make any allowance to the public for increases in the cost of petroleum. For that reason I think the people of Australia can look forward to a pretty heavy period in the coming year.
I believe that, first of all, there must be a reduction of interest rates to give impetus to the economy. There must be an unemployment relief scheme to take up the slack of employment, particularly where if affects young people, semiskilled and unskilled people, a great mass of whom are unemployed today. I believe that we must follow the policies of governments overseas, such as those of Singapore, Germany and Switzerland. These governments go in for public investment to lead the revival in the economy.
– That is what Dunstan is doing in South Australia.
– As the honourable member for Port Adelaide says, that is what Don Dunstan is doing. Not only is he holding elections, but he also knows how to fight them and give the right policies to the people to win those elections. These are the policies which must be implemented. They are the only sensible policies.
Until they are implemented the Australian people are in for a very tight time. Honourable members opposite will be in for a tight time themselves. I ask and challenge them to bring on an election as soon as they can. The sooner we get them to the polls the better.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired.
Debate (on motion by Mr Jarman) adjourned.
House adjourned at 10.26 p.m.
The following answers to questions upon notice were circulated:
asked the Prime Minister, upon notice, on 22 March 1977:
What consideration has been given to the payment of compensation to South Australia in the likely event of the closure of the shipbuilding industry in that State, in a similar manner to the compensation paid to Queensland following the cessation of mining operations on Fraser Island.
– The answer to the honourable member’s question is as follows:
Mining operations terminated on Fraser Island as a result of a Commonwealth Government decision that, for environmental reasons, they should do so. In the case of shipbuilding, however, the decision has been to continue the levels of assistance introduced by our predecessors. The cases are therefore not comparable.
Shipbuilding Industry: Submissions from South Australia (Question No. 452)
asked the Prime Minister, upon notice, on 22 March 1 977:
– The answer to the honourable member’s question is as follows:
asked the Minister for Post and Telecommunications, upon notice, on 27 April 1977:
– The answer to the honourable member’s question is as follows:
asked the Minister for Employment and Industrial Relations, upon notice, on 5 May 1977:
– The answer to the honourable member’s question is as follows:
Estimated total civilian labour- 6,208,000 persons.
Arrived before 1955-6.6
Arrived 1955 to 1 96 1 -5.7
Arrived 1962 to 1968-6.6
Arrived 1969 to 1975-6.7
Arrived January 1976 to February 1977-0.7
Data on persons registered as unemployed with the Commonwealth Employment Service is not classified by birth-place. However, data on unemployment are available from the quarterly labour force survey conducted by the ABS. The following information is derived from data in the bulletin The Labour Force, February 1977. Once again the estimates are based on a sample and they may differ from those that would have been obtained from a complete census using the same questionnaires and procedures.
Born outside Australia- 26.5 Arrived before 1955-3.9 Arrived 1955 to 1961-4.3 Arrived 1962 to 1968-7.3 Arrived 1969 to 1975-8.6 Arrived January 1976 to February 1977-2.4
asked the Minister Assisting the Prime Minister in Public Service Matters, upon notice, on 25 May 1977:
– The answer to the honourable member’s question is as follows:
! asked the Minister for Post and Telecommunications, upon notice, on 26 May 1977:
– The answer to the honourable member’s question is as follows:
Drama Programs: (a)
Power Without Glory Certain Women
The Company Men
They Don 7 Clap Losers
Rush (2nd Series)
Documentary Programs Women in the Church A Civilised Malady The Last Great Plague
Wildlife of Papua New Guinea
A Big Country
A Bay in the Balance Wild Australia
A Another Beginning From India to Nepal Tom Roberts- Australian Painter
Children’s Programs A Drop in the Ocean
Funny Things Happen Down Under lb)
Thames Television, UK Thames Television, UK Border TV Area, UK Southern Television, UK Border TV Area, UK Granada Television, UK Radio Telefis Eirean, Eire Telemalta Corporation, Malta Scottish TV Area, UK Yorkshire Television, UK Southern Television, UK Grampian TV Area, UK Yorkshire and Tyne Tess, UK Radiodiffusion Italiana, Italy Oy Yleisradio AB, Finland Icelandic State Broadcasting
Service- TV Iceland Granada Television, UK Nederlandse Omroep Stichting,
Netherlands BCNZ, New Zealand
BCNZ, New Zealand BCNZ, New Zealand Yugoslavia Radiotelevision
Yugoslavia Poltel, Poland BBC, UK
Hungarofilm Hungary Southern Television, UK Thames Television, UK Sveriges Radio TV- 1 , Sweden Telemalta Corporation, Malta Hungarofilm, Hungary Time-Life Films Inc., New York
Bahrain Television, Bahrain Telemalta Corporation, Malta Scottish Television Limited Scottish Television Limited
Radio Telefis Eirean, Eire Nederlandse Omroep Stichting
Holland Radio Televisao Portuguesa,
Portugal Telemalta Corporation, Malta Southern TV, UK Norsk Rikskringkasting,
Norway Poltel, Poland Radio Telefis Eirean, Eire
News and Public Affairs Programs
Weekend Magazine- 29 BCNZ, New Zealand separate items Four Corners- 16 separate BCNZ, New Zealand items This Day
Tonight- Interview with Lord Snowdon Monday
Conference- Broadcasting in a Democratic Society
BCNZ, New Zealand
BCNZ, New Zealand (a)
National Interdominion Trotting and Pacing
Championships The Kiwis are Coming Australian Rules Football
VFL Grand Final 1975 Test Cricket: Australia v.
West Indies Daily
Highlights of Play
West Indies on Tour (b)
BCNZ, New Zealand BCNZ, New Zealand
BCNZ, New Zealand BCNZ, New Zealand
Trinidad and Tobago Television
Rediffusion TV Ltd., Hong
Kong Trinidad and Tobago
BCNZ, New Zealand
Religious Programs Institut Bilong Tok Pies
Light Entertainment Programs
Rene Geyer (Funky Road) BCNZ, New Zealand
The Violins of St Jacques BBC, UK (Opera)
asked the Treasurer, upon notice, on 1 June 1977:
– The answer to the honourable member’s question is as follows:
Australian currency equivalent of Australian loans domiciled overseas, and of interest liability on those loans, has been calculated at the rate of exchange prevailing at 30 June 1 976.
asked the Minister for Health, upon notice, on 2 June, 1 977.
– The answer to the honourable member’s question is as follows:
Quarantine: Aircraft Landing at Broome (Question No. 1049)
asked the Minister for Health, upon notice, on 2 June 1977:
– The answer to the honourable member’s question is as follows:
am asked the Minister representing the Minister for Social Security, upon notice, on 16 August 1977:
On what date did Queensland provide information in response to the Prime Minister’s letter of 8 September 1976 concerning the priority of individual projects to be approved under the $4m annual grants for senior citizens’ centres in 1976-77, 1977-78 and 1978-79.
– The Minister for Social Security has provided the following answer to the honourable member’s question:
The information regarding the priority of individual projects in Queensland was received initially in a letter dated 1 8 October 1 976. This list was subsequently withdrawn by the Queensland Government and a further revised priority listing was received dated 10 March 1977.
am asked the Minister for Primary Industry, upon notice, on 1 7 August 1 977:
What have been the dates of declarations of his pecuniary interests which he has made to the Prime Minister?
– The answer to the honourable member’s question is as follows: 13 February 1976, 2 March 1976, 24 September 1976.
Cite as: Australia, House of Representatives, Debates, 23 August 1977, viewed 22 October 2017, <http://historichansard.net/hofreps/1977/19770823_reps_30_hor106/>.