House of Representatives
21 August 1979

31st Parliament · 1st Session



Mr SPEAKER (Rt Hon. Sir Billy Snedden) took the chair at 2. 1 5 p.m., and read prayers.

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ELECTORAL DIVISION OF GRAYNDLER

Return to Writ

Mr SPEAKER:

– I have received a return to the writ which I issued on 1 5 May for the election of a member to serve for the electoral division of Grayndler in the State of New South Wales to fill the vacancy caused by the death of the Honourable Francis Eugene Stewart. By the endorsement on the writ it is certified that Leo Boyce McLeay has been elected.

New Member Sworn

Mr Leo Boyce McLeay was introduced and made and subscribed an oath of allegiance as member for the Division of Grayndler, New South Wales.

page 1

PETITIONS

The Clerk:

– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:

Pensions

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled the petition of the undersigned citizens of Australia respectfully showeth:

That restoration of provisions of the Social Security Act that applied prior to the 1978-79 Budget is of vital concern to offset the rising cost of goods and services.

The reason advanced by the Government for yearly payments “that the lower level of inflation made twice-yearly payments inappropriate “ is not valid.

Great injury will be caused to 920,000 aged, invalid, widows and supporting parents, who rely solely on the pension or whose income, other than the pension, is $6 or less per week. Once-a-year payments strike a cruel blow to their expectation and make a mockery of a solemn election pledge.

Accordingly, your petitioners call upon their legislators to:

  1. Restore twice-yearly pension payments in the Autumn session.
  2. Raise pensions and unemployed benefits above the poverty level to 30 per cent of average weekly earnings.

And your petitioners as in duty bound will ever pray. by Mr Aldred, Mr Lionel Bowen, Mr Bryant, Mr Burns, Mr Donald Cameron, Mr Ewen Cameron, Mr Cohen, Mr Fisher, Mr MacKellar, Mr Les McMahon, Mr Morris, Mr Ruddock, Mr Shipton and Mr West.

Petitions received.

Education

To the Honourable, the Speaker and Members of the House of Representatives, of the Australian Parliament assembled. The petition of certain citizens of New South Wales respectfully showeth:

Dismay at the reduction in the total expenditure on education proposed for 1980 and in particular to Government Schools.

Government Schools bear the burden of these cuts, while non-Government school will receive an increase of 3.4 per cent.

We call on the Government to again examine the proposals as set out in the guidelines for Education expenditure 1980 and to immediately restore and increase substantially in real terms the allocation of funds for education expenditure in 1980 to Government schools.

And your petitioners as in duty bound will ever pray. by Mr Anthony, Mr Baume, Mr Cohen, Mr

Ellicott, Mr Gillard, Mr Hunt, Mr James, Mr Les Johnson, Mr Charles Jones, Mr Morris, Mr O’Keefe, Mr Uren and Mr West.

Petitions received.

Refugees

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That a grave threat to the life of refugees from the various States of Indo-China arises from the policies of the Government of Vietnam.

That, as a result of these policies, many thousands of refugees are fleeing their homes and risking starvation and drowning. Because of the failure of the rich nations of the world to provide more than token assistance, the resources of the nations of first refuge, especially Malaysia and Thailand, are being stretched beyond reasonable limits.

As a wealthy nation within the region most affected, Australia is able to play a major part in the rescue as well as resettlement of these refugees.

It should be possible for Australia to: establish and maintain on the Australian mainland basic transit camps for the housing and processing of 200,000 refugees each year; mobilise the Defence Force to search for, rescue and transport to Australia those refugees who have been able to leave the Indo-China States; accept the offer of those church groups which propose to resettle some thousands of refugees in Australia.

The adoption of such a humane policy would have a marked effect on Australia ‘s standing within the region.

And your petitioners as in duty bound will ever pray. by Mr Bourchier, Mr Ewen Cameron, Mr

Fisher, Mr Lloyd, Mr Macphee, Mr Shipton and Mr Street

Petitions received.

Refugees

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. We the undersigned citizens of Australia would urgently request our Government to consider

  1. That due to the horror of their situation the increase of refugees to Australia be at least doubled immediately.
  2. That transit camps for refugees be set up in Australia to ease the burden of our neighbours to the north. This means that food shelter and health needs could be met in Australia with Australian administration and control.

And your petitioners as in duty bound will ever pray, by Mr MacKellar.

Petition received.

Refugees

To the Honourable Speaker and the Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of South Australia respectfully showeth:

That 70,000 refugees from Vietnam are being expelled from Malaysia in boats facing great hazard at sea and that they are deprived of the protection of the laws of their own country and that they have no home and no haven anywhere in the world.

Your petitioners pray that the Australian government come to the aid of the afore-mentioned 70,000 refugees by increasing the quota of refugees to enter Australia, by appealing to the United Nations, by appealing to the Malaysian government and by appealing to countries around the world for shelter and protection.

And your petitioners as in duty bound will ever pray, by Mr MacKellar.

Petition received.

Metric System

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That the plan to obliterate the traditional weights and measures of this country does not have the support of the people;

That the change is causing and will continue to cause, widespread, serious and costly problems;

That the compulsory tactics being used to force the change are a violation of all democratic principles.

Your petitioners therefore pray:

That the Metric Conversion Act be repealed to ensure that the people are free to utilize whichever system they prefer and so enable the return to imperial weights and measures wherever the people so desire;

That weather reporting be as it was prior to the passing of the Metric Conversion Act;

That the Australian Government take urgent steps to cause the traditional mile units to be restored to our highways;

That the Australian Government request the State Governments to procure that the imperial and metric systems be taught together in schools.

And your petitioners as in duty bound will ever pray. by Mr N. A. Brown, Mr Falconer, Mr

MacKellar, Mr Macphee and Mr Staley.

Petitions received.

National Health Scheme

To the Honourable the Speaker and Members of the House of Representatives in the Commonwealth Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

  1. 1 ) It is our belief that at the next sittings of the parliaments it is the intention of the Government to increase the $2.30 NHS patient contribution.
  2. We the undersigned strongly object to the Government taking this action.

We therefore do ask the Government of Australia not to take the action that is believed intended.

And your petitioners as in duty bound will ever pray. by Mr Garland, Mr Hyde, Mr Shack and Mr Viner.

Petitions received.

Royal Commission on Human Relationships

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That because the Report of the Royal Commission on Human Relationships and especially its recommendations:

  1. Have been widely condemned for its support of unAustralian, anti-family, anti-child behaviour and morals such as incest, promiscuity, abortion, pornography, homosexuality, prostitution and brothels, etc. (Note: Refer quotations reverse side)
  2. Have been strongly criticised by the medical profession for the absence of any medical practitioner on the Commission or on its staff of 3 1 persons, and for the Commissioners action in rejecting or ignoring relevant medical evidence.
  3. Have been discredited as irresponsible in adopting a new definition of the family, i.e., ‘a varying range of people living together in relationships of commitment’, which has effectively confused the real meaning and intentions of the Report where it refers to the ‘ family ‘.

Therefore the Parliament has a responsibility to the families of Australia not to adopt this controversial report and its recommendations.

Your petitioners therefore humbly pray:

That the Australian Parliament will-

  1. Simply receive the report and not adopt its recommendations,
  2. Set up a Select Parliamentary Committee along the lines of the New Zealand Select Committee to conduct a public inquiry into the ways and means of supporting and strengthening family life and providing adequate protection for children from physical and sexual abuse before as well as after birth in accordance with the UNO Declaration of the Rights of the Child as part of Australia’s support for the Year of the Child.

Your petitioners therefore humbly pray that your honourable House will take no measures concerning the Royal Commission on Human Relationships Report that will further undermine and weaken marriage, child-care or the family which is the basic unit of our society.

And your petitioners as in duty bound will ever pray. by Mr Roger Johnston, Mr Peacock, Mr Ian Robinson and Mr Simon.

Petitions received.

Education

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled:

The humble petition of the undersigned citizens of Australia respectfully showeth:

  1. In South Australia Pre-School services are becoming increasingly inadequate.
  2. The development of adequate services has been curtailed by reduced Federal Budget allocations to Pre-Schools in the last two years.
  3. Projected cuts for 1979-80 will cause funher deterioration of the quality of services offered.

Your petitioners therefore humbly pray that the Federal Government increase its allocation for Pre-School education immediately to enable the provision of adequate pre-school services in South Australia.

And your petitioners as in duty bound will ever pray, by Dr Blewett, Mr Giles and Mr Young.

Petitions received.

Marine Radio Licence Fees

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That we oppose the increase in marine radio licence fees for the following reasons:

  1. 1 ) Radios are an essential part of safety equipment.
  2. ) Marine radio users save government millions of dollars in search and rescue.
  3. Increased licences will deter the boating fraternity from purchasing and using radios for their own safety.

Your petitioners therefore humbly pray that the government will reconsider the increased licence fee and also consider a reduction for pensioners.

And your petitioners as in duty bound will ever pray, by Mr Baume and Mr West.

Petitions received.

Education

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That the reintroduction of tuition fees for tertiary education and the introduction of a loans scheme of student financing as suggested by a research paper for the National Inquiry into Education and Training and as recommended for further study by the Committee of Inquiry, would add a significant financial burden to the already low finances of tertiary students.

Your petitioners also note that according to a major study on the abolition of fees made through the University of New South Wales Tertiary Education Research Centre, it is the category of students presently under-represented in tertiary education who would be most disadvantaged by the reintroduction of fees.

Furthermore, 20 per cent of students surveyed in that study said they would be forced to defer or not enrol if fees were reintroduced.

Your petitioners therefore humbly pray:

  1. That fees for tertiary study not be reintroduced.
  2. That the grants based Tertiary Education Assistance Scheme (TEAS) not be threatened by the introduction of a loans scheme of student financing.

And your petitioners as in duty bound will ever pray, by Mr Bourchier and Mr Lynch.

Petitions received.

Petitions

To the Right Honourable the Speaker and the Members of the House or Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia residing in the Electorate of Wannon respectfully showeth:

Your petitioners pray:

  1. That the government adhere to its commitment to take politics out of pension increases by giving automatic increases in line with price rises twice a year.
  2. That the Government immediately grant free medical, hospital and pharmaceutical benefits to any person receiving a portion of the aged pension.
  3. That the Government take steps to grant free medical, hospital and pharmaceutical benefits to all female citizens on reaching age sixty and all male citizens on reaching age sixty-five years.

And your petitioners as in duty bound will ever pray, by Mr Lionel Bowen and Mr Kerin.

Petitions received.

Health of Aboriginal Children

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That there are Australian Aboriginal children living under conditions of inadequate nutrition in a background of poor housing, hygiene, and over-crowding that amounts to a Third World enclave in the midst of affluence;

That such a state of affairs is intolerable in our country;

That only an effort on an unprecedented scale could create conditions that would give these children the rights set out in the United Nations Declaration of the Rights of the Child.

Your petitioners therefore humbly pray that the Government will make generous funding available for the specific purposes of:

Making a real improvement in the health, housing, education, employment and welfare of our Aboriginal people, doing so with due regard for the needs, hopes and aspirations of the Aboriginal people themselves.

Providing increased help, encouragement and opportunity for Aboriginal people to train as nursing aides and in other para-medical roles, and as fully qualified nurses, doctors and social workers.

Providing increased health education for Aboriginal people in ways that are acceptable to them. by Mr Clyde Cameron and Mr Wilson.

Petitions received.

Great Barrier Reef: Oil Exploration

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the citizens of the Commonwealth submits:

That off-shore oil exploration within the Great Barrier Reef Region constitutes a serious threat to the richest and most varied living system on earth.

Your Petitioners request that your Honourable House will:

  1. Prohibit oil exploration within the Great Barrier Reef Region,
  2. Declare the entire Great Barrier Reef Region a Marine Park under the Federal Government’s Great Barrier Reef Marine Park Act 1975,
  3. Provide the Great Barrier Reef Marine Park Authority with the staff and resources for effective management of the Region.

And your petitioners as in duty bound will ever pray, by Mr Cohen.

Petition received.

Great Barrier Reef : Oil Exploration

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of citizens of the Commonwealth submits:

That offshore oil exploration within the Great Barrier Reef Region constitutes a serious threat to the richest and most varied living system on earth.

Your Petitioners request that your Honourable House will:

  1. Declare the whole Great Barrier Reef Region a Marine Park under the Federal Government’s Great Barrier Reef Marine Park Act 1975,
  2. Prohibit oil exploration within the Great Barrier Reef Region (as defined by the 1975 Great Barrier Reef Marine Park Act),
  3. Retain full Federal Government control over the whole Great Barrier Reef Region,
  4. Provide the Great Barrier Reef Marine Park Authority with staff and resources sufficient for effective management of the Region.

And your petitioners as in duty bound will ever pray, by Mr Roger Johnston.

Petition received.

Women’s Refuges

To the Right Honourable the Speaker and Members of the House of Representatives of the Commonwealth in Parliament assembled: The humble petition of the undersigned citizens of Australia respectfully showeth:

That we, the undersigned:

  1. Protest against the present funding arrangements for Women’s Refuges, whereby the Federal Government contributes 75 per cent of recurrent costs and the State Government is expected to contribute the remaining 25 per cent.
  2. Are concerned that at present Women’s Refuges are dependent for their existence on State Governments who may or may not wish to contribute their share of the funds.
  3. Deplore the lack of support given to Women’s Refuges by the Western Australian Government.

We, the undersigned request the Government to:

Provide 100 per cent Direct Federal funding to Women’s Refuges so as to ensure the continuation of Women’s Refuges as an ongoing service in the community.

And your petitioners as in duty bound will ever pray, by Mr Dawkins and Mr McLean.

Petitions received.

Citizen Forces Long Service and Good Conduct Medals

The Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned members and ex-members of the Citizens Forces of Australia respectfully sheweth:

  1. On 14 February, 1975, the then Australian Government deprived the Officers and men of the Australian Citizen Naval Military and Air Forces of the distinctive and historic Decorations and Medals for long service and good conduct, namely the Reserve Decoration, the Efficiency Decoration, the Air Efficiency Award, the Efficiency Medal and Long Service and Good Conduct Medals, awarded for long and meritorious voluntary service in the citizen forces.
  2. The proposed substitution of the National Medal for these Decorations and Medals varies the principle of selective recognition of efficient voluntary service in the citizen forces in that it recognizes the period of service only and embraces also full time service as well in the defence forces as in the police, fire brigade and ambulance services.
  3. This deprivation caused and is continuing to cause serious discontent amongst personnel of the Citizens Forces who willingly and cheerfully give of their spare time outside their normal full time civilian careers, to serve Her Majesty and Australia.
  4. The Reserve Forces of Australia have been recognized by the present Government as a valuable- and costeffective component of the Defence Forces. Anomalously, whilst the Government is actually supporting recruiting for these Forces it has imposed and continued this deprivation which as foresaid has depressed the morale of the Citizen Forces.
  5. Her Majesty has not cancelled the said Decorations and Medals.

Your Honourable House take appropriate action to resume the award of the several distinctive Reserve Forces Decorations and Medals for Long Service and Good Conduct to members of the Royal Australian Naval Reserve, Army Reserve (C.M.F. ) and the R.A.A.F Citizens Air Force.

And your petitioners as in duty bound will ever pray. byMrAldred.

Petition received.

National Education and Training System

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

We the undersigned wish to draw the Government’s attention to the problems we will be facing if the NEAT scheme as it applies to handicapped children is closed down.

We have learning problems so we are not clever enough to get the School Certificate. We need a chance through the NEAT work experience program to show people what we can do.

The scheme helps us to learn how to work and how to be good employees. We get experience and develop skills which make us employable.

If you take the scheme away from us it will cost you a lot more money to keep us on the unemployment benefits than it does to train us.

Surely we are worth more than the few thousand dollars involved. Please let us become part of the workforce.

Your petitioners therefore humbly pray that the House take action to rescind their decision to discontinue the scheme.

And your petitioners as in duty bound will ever pray, by Mr Armitage.

Petition received.

Construction of Highway Between Bowen and Townsville

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled.

The humble Petition of the undersigned electors of the Division of Dawson respectfully showeth:

  1. During the wet season from December to March the Bruce Highway between Bowen and Townsville is in part covered with water for weeks at a time.
  2. This causes inconvenience and expense to residents of North Queensland and disrupts transportation of essential goods and services.
  3. The water on the roadway hastens the deterioration of road surfaces, worsening the already shocking condition of road surfaces on this road.
  4. Damage to road surfaces is aggravated by heavy road transports which must use this road as it provides the only road link to Nonh Queensland.
  5. The condition of the road is such that constant and extensive damage is done to private vehicles using the road.
  6. The condition of the road demands a manner of driving which is not conducive to conserving fuel.
  7. The Tourist Industry upon which North Queensland is so heavily dependent continues to be adversely effected (and prejudiced against its southern competitors) as a result of the condition of the road.
  8. To use the limited air facilities in North Queensland it is necessary to travel to the Townsville airport and in times of wet weather Townsville becomes inaccessible from the south because of the condition of the road.
  9. The condition of the road is a major contributing factor to the large number of accidents and fatalities that occur on this section of the Bruce Highway.

Your Petitioners therefore humbly pray that an all weather road for the section of the Bruce Highway between Bowen and Townsville be constructed as a matter of urgency.

And your petitioners as in duty bound will ever pray, by Mr Braithwaite.

Petition received.

Education

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That further cutbacks in Commonwealth funding to State Schools and transferral of funds to wealthy independent schools as required under the guidelines to the Schools Commission announced by the Minister for Education in early June are of vital concern in that they mitigate against the interests of the great majority of Australian Children in State Schools.

That Queensland State Schools have not reached the Resource Usage Targets set by the Schools Commission, and even at those financial levels will fall well short of actual provision standards envisaged by the Commission.

That Queensland’s effort in respect of Capital works is particularly of concern being less than half the per capita effort of other States.

Your petitioners therefore call on their legislators to ensure:

  1. That Federal funding to State Schools is restored to at least 1974-75 levels;
  2. the independence of the Schools Commission to recommend the allocation of funds to schools on the basis of need, unhindered by Government directive; and
  3. that sufficient funds are provided to Queensland, appropriately tied, to ensure achievement of National standards in this State.

And your petitioners as in duty bound will ever pray, by Mr Kevin Cairns.

Petition received.

Slaughter of Seal Pups

To the Honourable, the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That we protest against the barbaric slaughter of the Harp seal pups on the iceflows of Newfoundland. Not only are the seal pups viciously clubbed to death, many of them are skinned alive and their bodies left to rot on the ice. If these killings are allowed to continue, the species could become extinct.

We want to see a total ban on the import of seal products into Australia, and the support of the Australian Government in demanding that this massacre be stopped.

And your petitioners as in duty bound will ever pray, by Mr Fisher.

Petition received.

Issue of Commemorative Stamps

Petition to the Honourable the Members of the House of Representatives in Parliament assembled; petition.

The humble petition of the undersigned residents of the Northern Territory, South Australia, Victoria and New South Wales showeth; that we are distressed and concerned by the refusal by Australia Post to issue a commemorative stamp upon the50th Anniversary of the Association of Apex Clubs.

Your petitioners therefore pray that your honourable House will do all in its power to have the Commonwealth Government take immediate action to guarantee the reconsideration of the application.

And your petitioners as in duty bound will ever pray. by Mr Fisher.

Petition received.

National Women’s Advisory Council

To the Honourable the Speaker and Members of the House of Representatives assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That the National Women’s Advisory Council has not been democratically elected by the women of Australia;

That the National Women’s Advisory Council is not representative of the women of Australia;

That the National Women’s Advisory Council is a discriminatory and sexist imposition on Australian women as Australian men do not have a National Men’s Advisory Council imposed on them.

Your petitioners therefore pray:

That the National Women’s Advisory Council be abolished to ensure that Australian women have equal opportunity with Australian men of having issues of concern to them considered, debated and voted on by their Parliamentary representatives without intervention and interference by an unrepresentative ‘Advisory Council’.

And your petitioners as in duty bound will ever pray, by Mr Malcolm Fraser.

Petition received.

Universal Disarmament

To the Speaker and the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia in Parkes, N.S.W., respectfully showeth:

That taking note that the very Survival of Mankind is at stake, with the stockpile of nuclear weapons able to kill every person on Earth 24 times over; and this at the inflation causing cost of $ 1 , 000 million per day for the World, $7 million per day for Australia;

And noting that the energies released by lifting the burden of armaments could solve such problems as:

World hunger: The cost of one nuclear missile could feed the entire population of Bangladesh for 2 months; and I per cent of military budgets could finance the World Food Conference plans for increased food population and emergency reserves.

Malaria, smallpox, even cancer: The total cost of W.H.O’s campaign for the eradication of Smallpox was $83 million- the cost of one bomber; with $450 millionhalf day’s spending for military purposes, W.H.O. could completely eradicate Malaria; similarly with Cancer.

Education: At present, there are as many soldiers as teachers.

Unemployment: $49 million- one week’s worth- 1/52 of Australia’s defence spending- could create 3,000 jobs.

And noting that the Prime Minister, in his speech to the U.N. Special Session, said that “conscience and reason demanded that this waste of resources cease” and that disarmament is a matter of political leadership. “

Call upon the Australian Government, as a matter of the highest priority, in the interests of the Australian people no less than those of other peoples, to give this political leadership by acting promptly and effectively to further the disarmament which is the desire and determined will of the vast majority of the people of every nation in the World.

And your petitioners as in duty bound will ever pray, by Mr Fry.

Petition received.

Post Office Agency, Nedlands South

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That we object to the decision of Australia Post to close the Nedlands South postal agency.

Your petitioners therefore humbly pray that the decision to close the Post Office agency at Nedlands South, Western Australia, be reversed.

And your petitioners as in duty bound will ever pray, by Mr Garland.

Petition received.

Post Office, Daglish Village

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That we object to the decision of Australia Post to close the Daglish Village Post Office.

Your petitioners therefore humbly pray that the decision to close the Post Office at Daglish Village, Western Australia, be reversed.

And your petitioners as in duty bound will ever pray, by Mr Garland.

Petition received.

Government Economic Policies

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Petition of the undersigned citizens of Australia respectfully showeth:

That the Economic Policies of the ‘Mini Budget’ of 24 May are socially reprehensible and a breach of faith with the Australian people

As Low Income earners, we feel this continued erosion of our purchasing power, will cause us real economic hardship.

Your Petitioners call on the Australian Government as a matter of urgency to reverse its economic policies which are causing irreparable damage to the Australian economy and unnecessary economic and social hardship.

And your petitioners as in duty bound will ever pray, by Mr Les Johnson.

Petition received.

Atomic Reactor

To the Honourable the Speaker and Members of the House of Representatives of the Commonwealth in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth.

That they oppose the construction of any additional reactor at the Australian Atomic Energy Commission establishment at Lucas Heights in New South Wales.

And your petitioners as in duty bound will ever pray, by Mr Les Johnson.

Petition received.

Sales Tax

To the Honorable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth that the sales tax as applied to articles handmade by artisans is unfair.

An artisan is a handcraftsman, or a handcraftswoman, who exercises a non agricultural activity, revolving around the transformation of materials with his own handwork or that of his family. On craft, above all, the accent must be on design, practicability and quality, where the craftsman must perforce pay highly for his raw materials and time must not be a conditioning factor in the making of an article.

This petition seeks the objective examination of the existing Sales Tax Acts in respect to persons seeking to earn their living by the labour of their hands alone.

Every day, skilled artisans are being forced out of their livelihood, not by the competition of machine made goods. not by high prices of materials, but by the injustice of antiquated Sales Tax Laws. The artisan, thus taxed out of his living, will then go onto unemployment benefits, or worse still, to prostituting his craft by sacrificing his professional integrity, forcing him to lower his standards of workmanship in order to conform to existing laws.

We therefore request that a Sales Tax exemption be created immediately for all hand crafted articles.

We also request that the current exemption limit of $ 1 , 400 and $1,000 respectively referred to in items 100-(1) and 100-(2) of the Sales Tax (Exemption and Classifications) Act 1935-1967, be immediately raised to a realistic figure, in line with current living standards, and from then on to be periodically reviewed so as to keep pace with the Australian standard of living.

And your petitioners as in duty bound will ever pray, by Mr Peter Johnson.

Petition received.

Apex Clubs: Commemorative Stamp

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

The Association of Apex Clubs of Australia was founded in Geelong in 1931 and is the only service club founded in Australia. In March 1981 the Association will celebrate 50 years service to the Australian community. Commemorative stamps have been issued by Australia Post to celebrate the activities of Rotary International and Lions International.

Your petitioners therefore pray:

That Australia Post be asked to issue a commemorative stamp in 1 98 1 in order to celebrate the 50th anniversary of the only Australian service club.

And your petitioners as in duty bound will ever pray, by Mr Barry Jones.

Petition received.

Pensions

To the Honourable the Speaker and Members of the House of Represenatives in Parliament assembled. The humble Petition of undersigned citizens of Australia; e.g. undersigned electors of the Division of Flinders respectfully showeth:

We wish the pensions to be reviewed every six months.

Your Petitioners therefore humbly pray that you will exceed to our request at your earliest convenience.

And your petitioners as in duty bound will ever pray, by Mr Lynch.

Petition received.

Education

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That there has been a reduction in the subsidies paid to Pre-School Teachers and assistants.

Your petitioners therefore humbly pray that: The Government return to realistic subsidies of salaries for teachers and assistants of New South Wales Pre-Schools.

And your petitioners as in duty bound will ever pray. by Mr Lusher.

Petition received.

Royal Commission on Human Relationships

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That because the Report of the Royal Commission on Human Relationships and its Recommendations:

  1. contain matters of substance which ought to be pursued.
  2. result from a wide range of submissions made by Australians from all walks of life.
  3. identify many problem areas requiring attention.
  4. have been given media coverage which grossly distorts the contents.
  5. have thus far been ignored in Parliament.

Your petitioners therefore humbly pray:

That the Australian Parliament will:

  1. debate the Report and its Recommendations.
  2. make provision for rational public debate on the Report and its Recommendations.
  3. encourage its Members to support such public debate in their electorates.

Your petitioners therefore humbly pray that your honourable House will implement such measures to maintain the Commissioners’ ‘belief in the right and integrity of the individual to make free choices in the context of human relationships, and to have access to the knowledge and skills which give such a free choice meaning’.

And your petitioners as in duty bound will ever pray, by Mr Les McMahon.

Petition received.

Sydney (Kingsford-Smith) Airport

To the Honourable, the Speaker and Members of the House of Representatives in Parliament assembled. The Humble Petition of the undersigned Citizens of Australia respectfully showeth:

  1. We call upon the Commonwealth and State Governments to select a site for Sydney’s second Airport now and to protect it by immediate development.
  2. We do not agree to the expansion of the Sydney ( Kingsford-Smith ) Airport.
  3. We support the Marrickville Municipal Council’s opposition to the Airport extension proposals.
  4. We do not agree that nuisances from aircraft noises are reducing.
  5. We oppose any shorter evening ‘curfew ‘ hours.

Your petitioners therefore humbly pray that there be no extension of Kingsford-Smith Airport, Sydney.

And your petitioners as in duty bound will ever pray, by Mr Les McMahon.

Petition received.

Pornographic Publications

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That we the undersigned, having great concern at the way in which children are now being used in the production of pornography call upon the Government to introduce immediate legislation:

  1. To prevent the sexual exploitation of children by way of photography for commercial purposes;
  2. To penalise parents/guardians who knowingly allow their children to be used in the production of such pornographic or obscene material depicting children;
  3. To make specifically illegal the importation, publication, distribution and sale of such pornographic childabuse material in any form whatsoever such as magazines, novels, papers or films;
  4. To take immediate police action to confiscate and destroy all child pornography in Australia and urgent appropriate legal action against all those involved or profiting from this sordid exploitation of children.

Your petitioners therefore humbly pray that your honourable House will protect all children and immediately prohibit pornographic child-abuse materials, publications or films.

And your petitioners as in duty bound will ever pray. by Mr Martyr.

Petition received.

Excise

To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectively show us:

  1. That the excise duty at present imposed on beer and spirituous liquors is excessive.
  2. That there should be no further increase in the excise on beer and spirituous liquors.
  3. That the Australian Government should conduct an exhaustive inquiry into the damaging effect of the present excise duty, and any future proposed increase in excise duty on the liquor industry in Australia.
  4. That no excise duty should be imposed upon Australian wines, both fortified and other.

And your petitioners as in duty bound will ever pray, by Mr Millar.

Petition received.

Sale of Publicly Owned Enterprises

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth:

There is a definite limit to the quantity of Australia’s mineral resources.

Accordingly our resources should be managed and developed under Australian ownership and control.

Publicly owned trading enterprises and corporations have been established and operated for the benefit of Australians since Federation.

The Commonwealth Banking Corporation, Trans Australia Airlines, Housing Loans Insurance Corporation, Australian Meat and Livestock Corporation, Australian Wheat Board, were all designed to operate to the benefit of our Nation as a whole under public ownership.

The Fraser government’s irresponsible proposals to sell off our Nation’s interest in the Ranger Uranium Mine, the

Housing Loans Insurance Corporation, and to dispose of other successful statutory corporations such as Trans Australia Airlines, would be contrary to the Nation’s interests.

Your petitioners therefore humbly pray that the House of Representatives will reject outright proposals of the Fraser government to sell the Ranger Uranium Mine, the Housing Loans Insurance Corporation, Trans Australia Airlines, and other publicly owned enterprises.

And your petitioners as in duty bound will ever pray, by Mr Morris.

Petition received.

Television

The Honourable the Speaker and Members of the House of Representatives assembled: The humble petition of the undersigned citizens of Gippsland of the State of Victoria, respectfully showeth, that many Gippsland television viewers enjoy excellent reception of Melbourne based television stations, such reception of programs in the area has been of mutual benefit to both Melbourne and country commercial interests and country citizens generally. This good reception has been of particular benefit to many viewers in the central and western end of Gippsland who have experienced difficulty in having receivers pick up a clear signal from GLV 10. Most Gippsland TV viewers who receive Melbourne station signals have gone to considerable expense to provide special antennas and booster equipment.

Your petitioners therefore humbly pray that no action be taken which would prejudice the signal of Channels 7 and 9 being received in the Gippsland Region.

And your petitioners as in duty bound will ever pray, by Mr Nixon.

Petition received.

Television: Advertising of Alcohol

To the Rt Honourable, The Speaker, and Members of the House of Representatives in Parliament assembled, the petition of the undersigned citizens of Ballarat respectfully showeth:

We the undersigned citizens of Ballarat wish to express our great concern at the mounting road toll and at other forms of social troubles caused by excessive drinking.

Whilst fully accepting the need for individuals to have freedom of choice, we wish to express our concern at the encouragement to drinking, particularly by young people, which is caused by the advertising of alcohol on television.

We ask the Government to take action to restrict the advertising of alcohol on television in the same way in which it has restricted the advertising of cigarettes.

We are deeply concerned about this matter and we ask our Honourable Members to give it their urgent consideration

And your petitioners as in duty bound will ever pray, by Mr Short.

Petition received.

Importation of Fish

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: The humble Petition e.g. certain citizens of Australia (electors of the Division of Leichhardt) and other citizens of Australia respectfully showeth:

That the proposed restrictions on importations of inoffensive fish will severely restrict species most popular to aquarists whilst government releases of predators such as trout, gambusa and Nile perch can only be detrimental to the environment.

Your Petitioners therefore humbly pray that sound reason will prevail and a more realistic view will be adopted resulting in the defeat of the proposal.

And your petitioners as in duty bound will ever pray, by Mr Thomson.

Petition received.

Pensions

To the Right Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We, the undersigned citizens of the Commonwealth of Australia by this our humble Petition respectfully showeth:

That the decision of the Australian Government to depart from its 1 975 election promise, a promise re-affirmed during the 1977 election campaign, that pensions would be increased twice-yearly in line with increases in the CPI, will seriously add to the economic burdens now borne by those citizens who are wholly or mainly dependent on their pensions.

Your petitioners are impelled by this fact to call upon the Australian Government as a matter of urgency to review the abovementioned decision, and to determine.

That pensions will be increased twice yearly in line with rises in the CPI as promised by the Prime Minister in his 1 975 policy speech.

And your petitioners as in duty bound will ever pray, by Mr Viner.

Petition received.

page 9

DISTINGUISHED VISITORS

Mr SPEAKER:

– I draw the attention of the House to the presence in the chamber of the Speaker and Clerk of the Legislative Assembly of Victoria.

Honourable members- Hear, hear!

page 9

POSTAL SERVICES

Notice of Motion

Mr NEIL:
St George

– I give notice that on the next day of sitting I shall move:

That this House noting-

1 ) the unhealthy monopoly of mail delivery by Australia Post;

the repressive penal sanctions against persons or companies other than Australia Post who carry or convey or cause to be carried or conveyed letters for reward;

the potential for union blackmail inherent in such a monopoly, and

the widespread use of courier services and documents exchange services. is of the opinion that Australia Post should be subject to competition and calls upon the Government to introduce legislation to repeal section 85 of the Postal Services Act.

page 10

BRISBANE AIRPORT

Notice of Motion

Mr KEVIN CAIRNS:
Lilley

-I give notice that on General Business Thursday No 12, 1 shall move:

That this House-

1 ) congratulates the Minister for Transport and the Prime Minister for their announcement on 5 July 1979, to proceed with the first phase of the new Brisbane Airport, to cost $92m and

acknowledges that the people of Australia and especially of Queensland will receive enormous economic and social benefits from this development, and that the people of Queensland look forward to the manner in which the Minister for Transport and the Prime Minister will wield the first pick or drive the first bulldozer or whatever, with the active support of all Queensland Government members and senators.

page 10

QUESTION

QUESTIONS WITHOUT NOTICE

page 10

QUESTION

AVIATION GASOLENE

Mr HAYDEN:
OXLEY, QUEENSLAND

– I ask a question of the Minister for National Development. Is it a fact that the price of aviation gasolene has risen from under 1 5c a litre in November 1 975 to almost 50c a litre at present? Is the price now 333 per cent of what it was when the Fraser Government came to office? Is it a fact that the price has doubled this year? Will the Minister assure the general aviation industry and people who rely on general aviation for commuting, for rural industries and for essential services that these price rises will not continue?

Mr NEWMAN:
Minister for National Development · BASS, TASMANIA · LP

-The Leader of the Opposition has made a number of statements about avgas in the past 48 hours. The distinguishing feature of all those statements is that they have been completely inaccurate and riddled with misrepresentation. In relation to the question of pricing, the wholesale price of all shipments of avgas into this country has to go before the Prices Justification Tribunal for approval. The Government remains at arm ‘s length; it is the PJT which decides the price.

page 10

QUESTION

COMMONWEALTH EMPLOYMENT SERVICE

Mr FALCONER:
CASEY, VICTORIA

-My question is directed to the Minister for Employment and Youth Affairs and concerns representations which have been made to the Minister concerning the involvement of the Commonwealth Employment Service and its Professional Employment Office in activities already well covered by private employment agencies. Is the Minister aware that the Commonwealth Employment Service has recently extended its temporary staff activity into Victoria where private agencies already offer comprehensive temporary staff services? What public benefit is being served by such duplication of effort? When will the Minister respond to the many representations he has received requesting him to define more precisely the proper areas of activity of the Commonwealth Employment Service and its Professional Employment Office.

Mr VINER:
Minister for Employment and Youth Affairs · STIRLING, WESTERN AUSTRALIA · LP

– As the honourable gentleman indicated in his question, I have received a number of representations about the role of the Commonwealth Employment Service and, in particular, its Professional Employment Office section in relation to the activities of private personnel placement agencies. I have also recently received a report from the advisory committee to the Commonwealth Employment Service. That committee held some discussions with representatives of the private personnel agencies. Out of both the representations I have received from government members and the advice I have received from the advisory committee, I hope that I will be able to establish a situation in which each section will have its own role in this field. Historically the CES and PEO have always offered their services to employees or prospective employees who want assistance in obtaining employment.

There is a role for the CES in the area of those seeking temporary employment as well as those seeking permanent full-time employment, but I do see a need to rationalise both areas. This will come about through discussions between myself and the private personnel agencies. I have already had those discussions. I will take the representations and the advice I have received from the CES advisory committee into account.

page 10

QUESTION

THE PRIME MINISTER

Mr YOUNG:
PORT ADELAIDE, SOUTH AUSTRALIA

– I direct my question to the Prime Minister. I refer him to his statement in Perth that he would smarten up. I ask: Is that statement just another Fraser promise?

Mr MALCOLM FRASER:
Prime Minister · WANNON, VICTORIA · LP

– I have always believed that nobody is perfect. There is always room for improvement. Whenever I hear the honourable gentleman I am reminded of that.

page 10

QUESTION

ECONOMY: OPINION POLLS

Mr WILLIS:
GELLIBRAND, VICTORIA

– I ask the Treasurer whether he is concerned that the already low level of consumer confidence has recently been further depressed as shown by State retail sales and motor vehicle registrations, and in particular by the publication last week of a poll which showed such confidence to be at its lowest ebb since such polls commenced five years ago? Is the Treasurer also aware that the pollsters have concluded that that alarming situation is due to a strong adverse reaction to the mini-budget of last May and to deep concern by consumers regarding their personal financial positions which will not be alleviated by marginal tax cuts? In view of these findings will the Treasurer now concede that as an exercise in economic management, the minibudget of last May was a disaster?

Mr HOWARD:
Treasurer · BENNELONG, NEW SOUTH WALES · LP

-My answer to the last part of the question is no. My comment on the first part of the question is that later today I will have a few things to say about a few of the matters raised and I invite the honourable member to come along.

page 11

QUESTION

RADIO AUSTRALIA

Mr YATES:
HOLT, VICTORIA

-Is the Minister for Post and Telecommunications aware of the service that Radio Australia gives to our neighbouring countries? Is he aware that when I visited at least nine of those countries, I found that Radio Australia was considered to be one of the most valuable and most useful ways by which the views of this country are expressed abroad? Will the Minister, therefore, take all necessary steps to see that Radio Australia is given a higher signal and more power so that our views can be well heard in world affairs?

Mr STALEY:
Minister for Post and Telecommunications · CHISHOLM, VICTORIA · LP

– I appreciate the concern of the honourable member for the work of Radio Australia, and the Government supports that concern completely. Work on the limited restoration of the Shepparton installation has now been completed and in February 1978 the Government approved the restoration of the Cox Peninsula installation. Some limited repair work had been undertaken and some limited transmissions have taken place to improve the situation. There are other major developments, but because of the presentation of the Budget tonight I am prevented from making a precise announcement about the details of work to be undertaken in the next year. I can assure the honourable member that the Government has decided that the work will go ahead in the current financial year. We share his concern that Australia’s standing, as it is represented by Radio Australia, should be improved in the region.

page 11

QUESTION

MINISTER FOR PRIMARY INDUSTRY

Mr HOLDING:
MELBOURNE PORTS, VICTORIA

– Has the Prime Minister had his attention drawn to the released details of settlement between the family company of the

Minister for Primary Industry and Reliance Investments Pty Ltd over moneys allegedly misappropriated? Were the details of this settlement drawn to his attention prior to 2 August 1 979 and prior to his departure for overseas? Has all the material pertaining to this matter now been made available to the Prime Minister? On the basis of that information, is the Prime Minister satisfied that his own guidelines for the conduct of Ministers have been satisfied?

Mr MALCOLM FRASER:
LP

-The Australian Labor Party has sought to introduce this matter into this Parliament on many occasions, notwithstanding the fact that an inquiry is being conducted by Mr Finnane under the auspices of the New South Wales Labor Government. One would have thought that natural justice would require that while that inquiry is in train the matter should not be prejudiced by debate in this Parliament or any other place. If it were occurring before a court of law, that rule would prevail; but, because there have been developments in quasi-judicial tribunals and administrative tribunals since the time the rules of sub-judice were formed, these other tribunals and administrative inquiries are not covered by that rule. I do believe that once this particular case is out of the way this House should address itself to that question as a matter of great seriousness because the Australian Labor Party on every occasion has sought to prejudice the environment -

Mr Holding:

- Mr Speaker, I raise a point of order. The point of order that I raise is simply that the thrust of the question was directed to the Prime Minister in respect of his own guidelines for ministerial conduct. That was the purpose of the question. All these other views expressed by the Prime Minister, I submit, are irrelevant.

Mr SPEAKER:

– There is no point of order.

Mr MALCOLM FRASER:

– I hope that the honourable gentleman is also aware that the New South Wales Labor Government, through its own instrumentalities, has been conducting an inquiry. The point I am making is that while it is conducting that inquiry honourable members should accept this matter without debate so that the atmosphere will not be poisoned against the report of that inquiry. Of course, the objective of the Australian Labor Party is to poison the public mind in relation to my colleague, the Minister, notwithstanding whatever Mr Finnane might ultimately report. I am advised that what the Minister has done fits in with the pattern since he first became executor of his father’s estate. He reported these matters to the Corpora.; Affairs Commission of New South Wales; he reported these matters to the Taxation Office and I am advised that he has taken all the actions he could to put the matters right. Against that background, the settlement which was consummated a few weeks ago is a further step in that process. I have nothing to add on this matter. I have no doubt that it will be debated in a very fullblooded manner when Mr Finnane’s report or reports are ultimately seen publicly in the light of day.

Mr Sinclair:

– So that the honourable gentleman will not feel inhibited, I table a copy of the statement of settlement of outstanding matters in the Walsh group of companies, together with the Press statement thereon which I issued on 2 August last.

page 12

QUESTION

WHEAT: MARKETING ARRANGEMENTS

Mr LUSHER:
HUME, NEW SOUTH WALES

-I direct my question to the Minister for Primary Industry. After the recent Australian Agricultural Council meeting did the Minister announce that the proposed domestic wheat marketing arrangements might be disrupted because of the attitude of the New South Wales Government? Can the Minister inform the House whether the attitude of the New South Wales Government has altered? Can the Minister advise the House on progress with the wheat arrangements and when he expects to introduce the legislation?

Mr SINCLAIR:
NCP/NP

-The present wheat stabilisation arrangements expire on 30 September next. As a result it has been necessary over a considerable period to evolve the new domestic wheat marketing arrangements to apply from 1 October. There have been protracted discussions between officers of the respective State departments of primary industry and agriculture, my own Department, the Bureau of Agricultural Economics and the Australian Wheatgrowers Federation. As a result a number of elements of a new marketing scheme have been agreed to. Two of them seem to be oustanding. The New South Wales Government has said that it believes one of them to be in the form of a sweetheart agreement. That is an incredible term to use in view of the arrangements to which that Government has been privy in the negotiation of a domestic price formula for wheat for human consumption which takes account of the interests of both producers and consumers and which includes limits in that formula to ensure that there will not be an undue increase in price each year.

The formula is designed to protect both the producer and the consumer. In my mind it is akin to the indexation arrangements which we and other governments advocate in conciliation and arbitration tribunals. Therefore I do not believe it to be in any way akin to a sweetheart arrangement. Of course, that term has a different connotation in the industrial sense. I hope that the New South Wales Government sees fit to agree to the new proposals. I believe that it is very close to doing so. When we have that agreement, of course, complementary legislation will be introduced into this Parliament and into each of the State parliaments. That element and one other minor element remain the only issues outstanding. The other element, concerns an upper limit for stock feed and industrial feed wheats. I hope that the States will reach agreement as to the way in which that matter can be treated in future legislation.

page 12

QUESTION

DISALLOWED QUESTION

Mr Howe proceeding to address a question to the Prime Minister-

Mr SPEAKER:

– Order! The honourable member will resume his seat. The question is out of order.

Mr Young:

– The Minister has just tabled the document. He has surely opened up the matter for debate now. Why is the question out of order? Is it because it is embarrassing to the Government?

Mr SPEAKER:

-The honourable member for Port Adelaide will withdraw that statement.

Mr Young:

– I withdraw.

Mr SPEAKER:

-I have ruled the question out of order. The reason the question is out of order is that it contains an imputation on the conduct of a member of the House. It is therefore out of order.

Mr Hayden:

– I take a point of order, Mr Speaker. I think you have jumped to conclusions. As I heard the question, it was quite clear and distinct. It raised the proposition that the Minister for Primary Industry had been a director of certain companies for 20 years and these companies had failed to honour their tax responsibility. As far as I could hear the question, it did not get beyond that point.

Mr SPEAKER:

-That is right. It did not get beyond that point and I did not propose to allow it to get beyond that point.

Mr Hayden:

– I would like to know on what grounds -

Mr SPEAKER:

-Does the Leader of the Opposition wish to pursue the point of order?

Mr Hayden:

– Yes, I do, Mr Speaker. I fail to see how you can draw the conclusion with a clear and uncluttered mind that there could be an imputation against the Minister when the question had not been completed.

Mr SPEAKER:

-I have ruled the question out of order. I will not permit the matter to be debated.

page 13

QUESTION

MOTOR INDUSTRY: INDUSTRIAL DISPUTE

Mr CHAPMAN:
KINGSTON, SOUTH AUSTRALIA

-Is the Minister for Industrial Relations aware of the severe disruption being caused to production in the motor industry by an industrial dispute involving a minority of employees at the plant of W. H. Wylie and Co. Pty Ltd at Tonsley Park in South Australia? What are the consequences of this dispute for the Australian motor industry in general and the employees of Chrysler Australia Ltd in particular, many of whom live in my electorate of Kingston?

Mr STREET:
Minister for Industrial Relations · CORANGAMITE, VICTORIA · LP

– I am aware of the critical situation which is developing in the vehicle industry in Australia as a result of action taken by unions at W. H. Wylie and Company Pty Ltd in Adelaide. In July members of the Australasian Society of Engineers banned overtime in pursuit of a $20 a week wage claim. That claim came before the Conciliation and Arbitration Commission which ruled that it was outside the wage fixation guidelines. The commissioner concerned recommended that the bans be lifted. On 8 August the company dismissed 10 employeesmembers of the ASE- for refusing to work reasonable overtime in accordance with the terms of the award. That was followed by strike action by the ASE and the Amalgamated Metal Workers and Shipwrights Union and also the establishment of a picket line. In combination those actions have drastically affected the delivery of essential components to other vehicle manufacturers in Australia. Subsequent hearings have failed to resolve this dispute. I am informed that as a result the major vehicle manufacturers in Australia very shortly, perhaps as early as tomorrow, will be forced to stand down employees due to not getting essential components from Wylie ‘s. These stand downs could be quite massive, and could involve Chrysler Australia Ltd in the honourable gentleman’s electorate. This dispute highlights the selfish attitude of some unionists in pursuing excessive wage claims irrespective of what happens to their fellow workers. I am informed that the company has been prepared to discuss the issue at all times, provided of course that the picket line is removed. I believe that is an entirely proper attitude.

page 13

QUESTION

MINISTER FOR PRIMARY INDUSTRY

Mr HAYDEN:

– I ask the Prime Minister a question. I refer to certain private companies which tax investigators have discovered to have understated their incomes by more than $500,000 and which have been ordered to pay $340,000 in back taxes, including $113,000 in penalty tax. Is it a fact that the Minister for Primary Industry has been a director of these companies for up to 20 years? Does the Prime Minister acknowledge that the Minister misled Parliament by deliberately omitting this significant detail from his various and allegedly complete explanations to Parliament about the affairs of those companies? Does the Prime Minister have complete confidence in his Minister for Primary Industry?

Mr MALCOLM FRASER:
LP

-The Leader of the Opposition is seeking to pursue a course that the Australian Labor Party has pursued ever since this matter first became public. The Labor Party is seeking to debate particular matters in relation to this issue. It is seeking to poison the public atmosphere in which the Finnane report will ultimately be published- or, if some of the scuttlebutt is correct, a series of reports.

Mr Hurford:

- Mr Speaker, I raise a point of order. The New South Wales Government investigation referred to by the Prime Minister has nothing to do with taxation.

Mr SPEAKER:

-Order! There is no point of order. The honourable member will resume his seat.

Mr MALCOLM FRASER:

-The honourable gentleman would also know that letters have been tabled in this Parliament- if not, they can be tabled- which indicate that the matter was referred to the Commissioner of Taxation by the Minister and that there is full co-operation between the Minister as executor and the -

Mr Hayden:

– That is what we are worried about.

Mr MALCOLM FRASER:

– If the honourable gentleman is seeking by that remark to make an imputation against the Commissioner of Taxation- it sounds very like it- that is a very serious question indeed. This Parliament ought not to debate these matters because they are the subject of an official inquiry by the New South Wales Government. That being so -

Dr Klugman:

– Have you got confidence in him?

Mr Cohen:

– Don ‘t you support him?

Mr SPEAKER:

-I ask honourable members on my left to cease the continual interjections.

The question has been asked. It is a significant question. The answer deserves to be listened to in silence. I ask for co-operation from my left.

Mr MALCOLM FRASER:

-On the other aspect of the honourable gentleman’s question, the Opposition could ask me questions about all the Ministers in the Government. I have confidence in them all. I have very much more confidence in my Ministers than Mr Hawke has in the Leader of the Opposition.

page 14

QUESTION

AIR LINK BETWEEN TASMANIA AND NEW ZEALAND

Mr HODGMAN:
DENISON, TASMANIA

– My question is directed to the Minister for Transport and relates to developments in the proposed direct air link between Tasmania and New Zealand. Can the Minister inform the House of the progress being made in the negotiations between the Australian Government, the New Zealand Government and the Australian domestic airline operators, Ansett Airlines of Australia and Trans-Australia Airlines, with respect to the proposed establishment of a direct air passenger service between Hobart, Tasmania and Christchurch, New Zealand?

Mr NIXON:
Minister for Transport · GIPPSLAND, VICTORIA · LP

– I must pay tribute to the honourable member for Denison for the consistent way in which he brings forward the problems of the electorate he represents and of Tasmania as a whole. His actions are in stark contrast with those of the members of the Australian Labor Party in this House. I have not had one question from them on Tasmania’s behalf since I have been Minister for Transport. They prefer to follow the dirty path of smirching by innuendo that they have been following today. It is typical of members of the Labor Party to do so. The honourable member for Denison asks constructive questions about matters affecting the people of his electorate.

Opposition members interjecting-

Mr SPEAKER:

-Order! The House will come to order.

Mr NIXON:

– In respect of the question raised by the honourable member, I can say -

Mr Hurford:

-At last.

Mr NIXON:

– Is the honourable member taking an interest?

Mr SPEAKER:

-The Minister will proceed with his answer.

Mr NIXON:

-The facts are that there have been discussions at an official level between the Australian Government and the New Zealand Government and that proposals have been put forward by the airlines to start an air link between Hobart and New Zealand. The ball is really in the court of the airlines at the moment because we are awaiting further information as to details of costs, fare proposals and the like before the Australian and New Zealand Governments can come to final conclusions on the matter. The honourable member can rest assured that as soon as I have further information I will pass it to him immediately.

page 14

QUESTION

FORMER STAFF MEMBER OF PRIME MINISTER

Mr HAYDEN Has the Prime Minister noticed that a person who paid for the employment of a research officer on the personal staff of the right honourable gentleman in 1974 has been gaoled for 13 years for conspiracy to cheat and defraud a group of companies of $500,000? Does the Prime Minister know the source of the funds used to pay his former adviser and can he be sure they did not come from misappropriated funds? As the Prime Minister has often said that there is no such things as a free lunch, what costs and obligations did he, the Prime Minister, undertake in this arrangement?

Mr MALCOLM FRASER:
LP

-Questions have been asked about this matter over a period of months or years and I have no intention of adding anything to what has already been said.

page 14

QUESTION

AVGAS

Mr CALDER:
NORTHERN TERRITORY

-Can the Minister for Trade and Resources assure the House that no avgas which should rightfully be used in Australia is being allowed to be exported? I hope that his answer will assist the Leader of the Opposition.

Mr ANTHONY:
Deputy Prime Minister · RICHMOND, NEW SOUTH WALES · NCP/NP

-Some attention has been given to this matter in the last 24 hours by the Leader of the Opposition who has made some allegations which are somewhat unfounded. I assure the House that no avgas which should not have left the country has left it. In fact, no avgas that the Government could or would want to prevent from leaving the country has left it. There have been allocations of crude oil to our refineries for refining and distribution to New Zealand and the Pacific Islands, including Fiji. This has been a traditional form of trade. To suggest, as the Leader of the Opposition has suggested, that we should prevent those sales from taking place is virtually to say that we should seize somebody else’s property. Because there is a shortage here, that does not give us any right of piracy regarding avgas which is destined for another place. The prices that were cited by the

Leader of the Opposition were not accurate. They related to different periods.

Mr Hayden:

– If your Department of Trade and Resources is reliable, they were accurate. Do you deny that they are accurate?

Mr SPEAKER:

-The Leader of the Opposition will remain silent.

Mr ANTHONY:

-The Leader of the Opposition made a number of allegations which are completely wrong and unfounded. He came to the completely wrong conclusions. The exports that took place were in March this year. It is true that they were recorded in April by the Commonwealth Statistician. It is a matter for the Commonwealth Statistician to explain why they were recorded in April.

Mr Hayden:

– I see. The Government’s figures are wrong and everyone else has to take the blame.

Mr ANTHONY:

– It would not make any difference whether the figures were recorded in March or April because there was no shortage at that time. The facts are that we were not notified until May about a pending shortage of avgas. We immediately took action to see that all exports were being monitored. It is all right for the Leader of the Opposition to make a lot of noise now. He is obviously trying to win some goodwill amongst those people who are concerned about the shortage of avgas. Having explained the reasons and the details, if the Leader of the Opposition continues in the noisy way in which he is now going on, then it will show that he is nothing more than a hollow Leader of the Opposition.

page 15

QUESTION

RANGER URANIUM DEPOSIT

Mr KEATING:
BLAXLAND, NEW SOUTH WALES

– I refer the Deputy Prime Minister to his statement of 6 August in respect of the Ranger project and the Government’s intention to sell control of yet another Australian resource. I ask the Deputy Prime Minister: What criteria will the Government use to assess offers for the sale of its 50 per cent interest in the Ranger project? Will consideration be restricted to Australian interests or will the Government sell to any interest that offers the highest premium on its share of Ranger? If the latter is the case, does the Government intend at least to stand by its 75 per cent- 25 per cent Australian equity policy for uranium deposits or does it intend to invoke the 50-50 approach developed for the Yeelirrie deal and thus run out on its own stated investment policy, its commitments to the Parliament with respect to uranium policy and the national interest?

Mr ANTHONY:
NCP/NP

– I do not know whether to laugh or cry at the Opposition’s new found interest in uranium and its concern about any actions which might take place which might interfere with the development and the prospects of this very valuable economic resource to Australia. The Australian Labor Party has not been wanting to develop uranium.

Mr Uren:

– Can’t you sell it?

Mr ANTHONY:

– I am glad to see that the honourable member for Reid has woken up. The mention of the word ‘uranium’ generally does wake him up. It is nice to know that he is still here. The Labor Party has wanted this resource left in the ground.

Mr Keating:

– We still do.

Mr ANTHONY:

– Well, why is the Labor Party concerned about the partnership structure? If it is really concerned about the development of uranium, why does it not go and give some advice to South Australia where one of the greatest mineral resources in Australia -

Mr Keating:

- Mr Speaker, I take a point of order. I have asked a specific and detailed question relating to the Government’s investment policy in relation to a deposit of uranium, and I am entitled to a specific answer to that question.

Mr SPEAKER:

-The right honourable gentleman’s answer is relevant to the question. The honourable gentleman cannot call for the right honourable member to answer in the way in which the honourable gentleman wants. The answer is relevant.

Mr ANTHONY:

– There is a vast difference between the philosophy of the Government and that of the ALP. The ALP wants to take over ownership and instigate the nationalisation of Australian resources. When the Labor Party was in office it started this process of taking over partownership of various resources. When we came to office, we declared that we would relinquish and divest the Australian government’s interests in various projects such as Wambo, Cooper Basin, Mareeba and Mary Kathleen. These are areas in which action has been taken to divest the Commonwealth interest to allow the private sector to get on with development. Because of the attitude of the ALP we saw development of these valuable resources come to a standstill. Nothing took place in this country. It was largely as a result of this that we saw the development of so much business stagnation and unemployment. Therefore, the Government’s attitude is that it should get out of these enterprises.

There was a memorandum of understanding into which the Labor Party elbowed its way to get control of 50 per cent of this resource. It virtually bludgeoned Peko and EZ into this arrangement. That is history now. It took place under a Labor Government. We are now examining the question of whether the Government should remain in this joint project. We are looking at the matter now because we believe that it is the opportune time to do so. The project is under way. We have managed to usher the project to a point where it is proceeding to develop. We have to make marketing arrangements. Often marketing arrangements can be on a long term basis. If it were ever suggested after these marketing arrangements were made that the Government might divest itself of its interest that would limit the potential buyers of such a project.

What we are doing now is seeking out those people who might be interested in taking over the Government’s ownership. To this time approximately 40 companies have shown an interest in buying the Government’s share. I think that this completely exposes the falseness of the argument of all those people who say that there is no market for or interest in uranium. Forty companies are prepared to take over the Government’s interest. We will be looking at all of these proposals. We will then assess what action the Government ought to take- whether it should divest itself of the whole of its 50 per cent interest in accordance with its philosophy, whether it ought to divest itself of part of it or whether it ought to retain the understanding it has at the moment with the companies concerned; that is, to provide 72!6 per cent of the capital and retain 50 per cent of the production.

page 16

QUESTION

INDUSTRIES ASSISTANCE COMMISSION: DRAFT REPORT ON TEXTILES

Mr HYDE:
asked a disallowed question · Having previously

– Again I address my question to the Minister for Industry and Commerce. Is he aware of the campaign launched to sink the Industries Assistance Commission’s draft report on textiles? Is the last paragraph of his Department ‘s Press release of 9 August, No. 80 of 1979, a clear statement of the Government’s position on this matter?

Mr LYNCH:
Minister for Industry and Commerce · FLINDERS, VICTORIA · LP

– 1 am, of course, very much aware that the recently released draft report of the Industries Assistance Commission on the textile, footwear and clothing industries has evoked a number of strong comments in the Australian community both from manufacturers and importers. As the House would be very much aware and as I have pointed out publicly recently, these reports were brought down to provide, in a sense, a discussion paper to allow groups in the Australian community to respond to the draft nature of the Industries Assistance Commission’s thinking at this time. All parties will have an ample opportunity to respond to the IAC in the public hearings which it has scheduled.

The House will also be aware that the policy for the industries concerned has been extended on the basis of the IAC report through to mid- 1 98 1 . As for the final part of the honourable gentleman’s question, I assure him that the Government, when taking decisions on the final IAC report when it comes before the Government, will do so on the basis of the most comprehensive information which is available to it. It will have regard to all the available policy options.

page 16

QUESTION

SUCCESS OF BUDGETS

Mr HURFORD:

-My question is directed to the Prime Minister. Is it a fact that, counting the mini-Budgets, tonight’s Budget will be about the sixth Budget since he became Prime Minister nearly four years ago? Which of the past five Budgets has been most successful in achieving the result of pointing the Australian economy in the present direction of double digit inflation, record levels of unemployment -

Mr SPEAKER:

-Order! The honourable gentleman is entitled to ask for information, but he is not entitled to argue.

Mr HURFORD:

– I am asking for information on which of the past five Budgets has been most successful in directing the Australian economy in the present direction; that is, to record levels of unemployment and higher interest rates.

Mr HOWARD:
LP

– All I would say in response to the honourable member for Adelaide is that all the Budgets and principal economic statements of the Fraser Government, including those of May 1976 and May 1979, have made a far greater contribution to recognising the economic problems of this country than any Budget or economic statement produced by the Opposition when in government.

page 16

QUESTION

UNITED STATES: BEEF SHIPMENTS

Mr O’KEEFE:
PATERSON, NEW SOUTH WALES

– Can the Minister for Primary Industry advise the House whether shipments of beef to the United States will fill the quota entitlement this year? If so, is there likely to be any distribution of shortfall? In either event, what is the effect of the announced introduction of counter-cyclical restraints on future levels of beef imports?

Mr SINCLAIR:
NCP/NP

– During the first six months of this year the rate of shipment of beef to the United States was way above that required to meet the 12-month allocation within the United States quota. Accordingly, there will need to be some reduction in the rate of shipment during this next six months but it is expected that there will be no difficulty at all in meeting that quota. Indeed, we would hope that there might be an allocation of shortfall. If so, Australia would feel itself well and truly in a position to meet any allocation that might be made to it. Last week, in north-west Western Australia, I ran into a number of problems at meat works. It seems that the rate of supply of cattle is likely to outstrip the present available allocation of quotas to those works. Therefore, I am sure there is no reason for anybody in Australia to feel that there is an inadequacy of livestock to meet the present quota entitlement in the United States.

With respect to the counter-cyclical legislation, the honourable gentleman would know that the special trade negotiator of the United States Government, Ambassador Strauss, is due to confer shortly with my colleague the Minister for Trade and Resources with respect to the impact on Australia of the announcement by the American administration of its acceptance of terms with respect to shortfall allocation that differ from the original arrangements made within the multilateral trade negotiations. Both the Deputy Prime Minister, the Minister for Trade and Resources, and I have written- I to the Secretary for Agriculture, Mr Bergland, and he to Ambassador Strauss- with respect to the impact of this decision on future trade flows for Australia. However, there is no likely immediate impact on Australian exports of any decision with respect to counter-cyclical legislation. In the immediate future the general world supply of beef is such that markets are available in the United States and elsewhere around the world which will ensure the stability of the Australian beef industry. Therefore, while there is a concern in the medium term about the impact of this United States legislation, in the short term it is not expected that it will impair in any way the present prospects for a continued buoyant market condition generally abroad for Australia’s beef exports.

page 17

QUESTION

DISALLOWED QUESTION

Mr James having addressed a question to the Prime Minister-

Mr SPEAKER:

-Order! The honourable member will resume his seat. The question is out of order.

Mr Hayden:

– I ask why that question is out of order.

Mr SPEAKER:

-Because it does not relate to any matter for which a Minister, the Prime Minister or another Minister, has an official responsibility in this House.

Mr Hayden:

– On the contrary, the Prime Minister has an overriding responsibility for all matters of the Cabinet and has the prime decision and influence on policy matters within the Government. This has been a matter -

Mr SPEAKER:

– I have ruled on the matter.

Mr Hayden:

– With respect, Mr Speaker, I challenge your ruling. You have allowed questions on this matter many times before.

Mr SPEAKER:

-The honourable gentleman is entitled to challenge my ruling if he wishes. There is a method by which he can do so.

Mr Hayden:

– I do not wish to do it on the first day, but if this keeps up we will do so, and I expect that it will be before the end of this week.

Mr SPEAKER:

-Order! I ask the honourable gentleman to withdraw the imputation.

Mr Hayden:

– I withdraw the statement but reserve my right to reconsider the matter.

Mr SPEAKER:

-The honourable gentleman will withdraw the imputation without qualification.

Mr Hayden:

– I withdraw the statement.

page 17

QUESTION

RENTAL HOUSING

Mr UREN:

– I ask the Prime Minister whether on 21 November 1977 he promised the Australian people that he would make ‘an Australia which is strong and secure, which cares for those in need’. Is he aware that between December 1975 and March 1979 the price index for private rental housing rose by nearly 18 per cent and that the price index for Commonwealth-State government rental housing rose by nearly 49 per cent in the same period? Is he also aware that in Victoria alone the number of Housing Commission tenancies in arrears rose by over 50 per cent between February 1978 and February 1979 to nearly 14,000, which is 40 per cent of the Housing Commission tenancies in Victoria?

Mr SPEAKER:

– I ask the honourable gentleman to draw his question to a conclusion.

Mr UREN:

-I am, Mr Speaker. Is the Federal Government’s policy deliberately intended to increase the costs of public housing and to impose increased burdens on low and middle income earners? If so, does this represent another broken promise by the Fraser Government?

Mr GROOM:
Minister for Housing and Construction · BRADDON, TASMANIA · LP

– Since coming to office this Government has certainly provided substantial assistance to those in need, including those seeking welfare housing. The honourable member for Reid, conveniently for this side of the House, has raised the question of rental housing. It was announced by the Prime Minister at the recent Premiers Conference that we will be substantially increasing the funds available for rental housing through grants in the current financial year. The sum of $ 100m will be provided to the States for rental accommodation. The important point is that this money is to be provided by way of grants and not by way of advances, as in the past. Therefore, this is money that the States will not have to repay. It will assist those in need. It will assist pensioners in particular. It has already been announced that $30m will be provided for pensioners. Additional funds will be provided for Aboriginals. This money will certainly assist those in need of rental accommodation. The facts do not support the contentions of the honourable member for Reid. We continue to provide substantial assistance for those in need of welfare housing.

page 18

REPORT OF THE BUREAU OF TRANSPORT ECONOMICS

Mr NIXON:
Minister for Transport · Gippsland · LP

– For the information of honourable members I present a report of the Bureau of Transport Economics entitled ‘The Long Distance Road Haulage Industry’. This report was distributed to honourable members during the adjournment.

page 18

AUSTRALIA’S ANTARCTIC PROGRAM

Mr VINER:
Minister for Employment and Youth Affairs · Stirling · LP

– For the information of honourable members I present the comments of the Australian Science and Technology Council on Australia ‘s Antarctic program.

page 18

FOREIGN ANTITRUST JUDGMENTS (RESTRICTION OF ENFORCEMENT) ACT 1979

Mr VINER:
Minister for Employment and Youth Affairs · Stirling · LP

– Pursuant to section 48 of the Acts Interpretation Act 1901 as applied by section 3 of the Foreign Antitrust Judgments (Restriction of Enforcement) Act 1979 I present an order made by the Attorney-General under section 3 of the Foreign Antitrust Judgments (Restriction of Enforcement) Act 1979 together with the text of a statement by the AttorneyGeneral relating to the order.

page 18

REPORT OF THE LAW REFORM COMMISSION

Mr VINER:
Minister for Employment and Youth Affairs · Stirling · LP

– Pursuant to section 37 of the Law Reform Commission Act 1973 I present a report of the Law Reform Commission on unfair publication, defamation and privacy, together with the text of a statement by the Attorney-General relating to the report.

page 18

COMMONWEALTH TEACHING SERVICE ACT

Mr STALEY:
Minister for Post and Telecommunications · Chisholm · LP

– Pursuant to section 52 of the Commonwealth Teaching Service Act 1 972 1 present the annual report on the operation of that Act for the year ended 31 December 1978.

page 18

STATES GRANTS (SCHOOLS) ACT 1972

Mr STALEY:
Minister for Post and Telecommunications · Chisholm · LP

– Pursuant to section 10 of the States Grants (Schools) Act 1972 I present the report of the Schools Commission on financial assistance granted to each State during the year ended 30 June 1 978.

page 18

AUSTRALIAN ANTARCTIC PROGRAM

Mr GROOM:
Minister for Housing and Construction · Braddon · LP

– For the information of honourable members I present the text of a statement made by the Minister for Science and the Environment (Senator Webster) on Australia’s Antarctic program.

page 18

PERSONAL EXPLANATIONS

Mr SINCLAIR:
Minister for Primary Industry · New England · NCP/NP

– I wish to make a personal explanation.

Mr SPEAKER:

-Does the honourable gentleman claim to have been misrepresented?

Mr SINCLAIR:

-Yes. During Question Time in a question to the Prime Minister (Mr Malcolm Fraser), the Leader of the Opposition (Mr Hayden) intimated two facts which I would like to contest. The first matter was a suggestion that I had been a director of the Walsh group of companies for more than 20 years. Whilst, nominally, I had been a director I played no part in the operations of those companies other than in signing a very few forms and then at the behest of my father. During that time, in fact, I did not even meet members of the companies nor play any part in any of the affairs of that group until my father’s death in 1976.

The second matter was one in respect of allegations that in some way as a result of my association with these companies I had been involved in manipulating their financial affairs and so minimising tax. Indeed, directly, the reverse is true. It was as a result of my actions, which I disclosed in this House nearly two years ago, that the whole of the affairs of the company were brought to the notice of the Commissioner of Taxation and then not by me. So as to avoid personal involvement, accountants and solicitors on my behalf advised the Commissioner of Taxation. It was directly as a result of that action that the Commissioner of Taxation became aware of these matters. Of course, since my instruction of independent chartered accountants to bring those books up to date, the Commissioner of Taxation has, in continuance, been involved in ensuring that there has, in fact, been a complete meeting of the necessary tax obligations. I would suggest that some of those members of the Opposition who are so anxious to query me on this matter might well have their own affairs investigated to the same degree.

Mr SPEAKER:

-Order! The honourable gentleman will resume his seat.

Mr YOUNG:
Port Adelaide

-Mr Speaker, I seek your indulgence in relation to this matter. We are being ruled out of order as a result of directing questions to either the Prime Minister (Mr Malcolm Fraser) or the Minister for Primary Industry (Mr Sinclair). Mr Speaker, you can see from the process of Parliament over the last two years that these matters are coming out very painfully, bit by bit. The situation will not be helped if we are to be frustrated in questioning the Minister about some of these affairs. He now takes the course of reading out what he thinks is to his benefit.

Mr SPEAKER:

-Order! I must point out to the honourable member for Port Adelaide -

Mr Young:

– I am sorry about being an idiot.

Mr SPEAKER:
Mr Young:

– I am sorry about that.

Mr SPEAKER:

-I call the Leader of the Opposition.

Mr HAYDEN:
Leader of the Opposition · Oxley

– I wish to make a personal explanation as I claim to have been misrepresented.

Mr SPEAKER:

-Order! The Leader of the Opposition will resume his seat. This is the first day of this sessional period and the honourable member for Port Adelaide (Mr Young) has been interjecting continually and speaking while I am speaking. I must draw his attention to the fact that I will not put up with this sort of unparliamentary behaviour. I ask the honourable gentleman to behave in a more fitting manner.

Mr HAYDEN:

-Mr Speaker, the Minister for Primary Industry (Mr Sinclair) claimed that he was only a nominal director of the company. The statement came in response to a question which I asked.

Mr SPEAKER:

-Order! The Leader of the Opposition asked leave to make a personal explanation. Does he claim to have been misrepresented?

Mr HAYDEN:

-Yes. The Minister for Primary Industry has denied the whole thrust of the question which I raised in this Parliament and has sought to use a personal explanation to give an explanation. He should give an even more detailed explanation to this Parliament to allow debate to ensue. The situation is that the Minister for Primary Industry has signed documents -

Mr SPEAKER:

-Order! The honourable gentleman is not making a personal explanation to put right a misrepresentation. The honourable gentleman is debating the matter. He is debating it and I will not permit that.

Mr HAYDEN:

– The Minister in his personal explanation referred more that once to the statement explicit in my question which I directed at Question Time today to the Prime Minister (Mr Malcolm Fraser) and which affected the Minister for Primary Industry. Therefore, I think I am entitled to put another point of view. Mr Speaker, you have allowed the Minister to canvass this issue fairly broadly. He has sought to argue, in circumstances designed to prevent debate in this House, that he is not a responsible director of certain family companies which were the subject of that question. Mr Speaker, I am putting it to you that there is a misrepresentation both of fact and of my question in that he has signed certain documents. I might say that there are serious inconsistencies in signatures purporting to be his signature over a certain time -

Mr SPEAKER:

-Order! The Leader of the Opposition will resume his seat. That is not a personal explanation. It is pursuing debate. If the honourable gentleman wishes to debate the matter there are means by which he can do so but now is not the time for that process.

Mr CHARLES JONES:
NEWCASTLE, VICTORIA · ALP

– Is the hard line that you, Mr Speaker, have been pursuing today an indication of Government policy that the Government will have to smarten up?

Mr SPEAKER:

-No. The honourable gentleman will resume his seat.

Mr Holding:

- Mr Speaker, I raise a point of order. I seek your advice, and ask for a ruling. This is now the third occasion on which the Minister for Primary Industry (Mr Sinclair) has sought to make public and canvass issues in this House that go to the question of his company directorships and to relate them to the question of his ministerial integrity. My point of order is that the moment the Minister chooses to raise these issues in this way- it is his choice- those statements become the property of the House. As such- this is the point upon which I seek your guidance- these matters ought to be quite properly the subject of questions in Question Time and we should be able to refer to them. Otherwise we are getting into the difficult situation in which a Minister can get up and say that although he is a director of a company he is not personally responsible, that he is some kind of nominal defendent. He can make all sorts of statements,

Mr SPEAKER:

-Order! The honourable gentleman is now debating the matter.

Mr Holding:

– I do not mean to. I request from you, Sir, a specific ruling as to the rights of honourable members to question any Minister or honourable member who raises issues which go to the matter of ministerial integrity and to raise those questions in Question Time despite the fact that they might be the subject of quite separate investigations.

Mr SPEAKER:

-I take the point that the honourable member is making. The fact is that I can only interpret Standing Orders. If the honourable gentleman is dissatisfied with Standing Orders, then it is a matter for moving to change the Standing Orders. But, as the Standing Orders exist relating to questions, questions without notice are confined to those things for which the Minister has an official responsibility to the House. There is no official responsibility to the House for these matters of a private nature. The honourable gentleman says that because the right honourable Leader of the House has introduced into the House certain material by way of a statement or personal explanation today, then that in some way transforms the Standing Orders and what the Standing Orders permit. It does not do that. The right honourable gentleman has taken the opportunity that is presented by the Standing Orders to do what he has done. Standing Orders nevertheless do not permit questions to be directed against the right honourable gentleman about matters for which he is not officially responsible to this House.

Mr Young:

- Mr Speaker, I wish to say one final word. I wish to make our position as an Opposition perfectly clear. We have never, at any stage, frustrated the Minister from making a statement of any length to this House. We have never frustrated the Minister from tabling documents. We have never frustrated the Minister from including documents in Hansard. We have given him every possible opportunity. I do think that you, Mr Speaker, should see that we are being frustrated when trying to ask further questions which those documents throw up.

Mr SPEAKER:

-I have given the honourable gentleman the liberty to make that statement to make his and his Party’s attitudes clear. I understand it. Likewise, the honourable gentleman must understand that my duty to this House is to interpret the Standing Orders. If the honourable gentleman wishes to pursue the question in some other way then no doubt he can have recourse to Standing Orders. But it is not possible to pursue the matter by asking a question without notice.

Mr Hayden:

- Mr Speaker, I seek leave to move that the House take note of the papers tabled by the Minister for Primary Industry.

Leave not granted.

page 20

MILLENNIUM OF TYNWALD

Mr SPEAKER:

-I inform the House that on 5 July 1979 I presented an address of congratulations from the Commonwealth Parliament on the occasion of the Millennium of Tynwald. The address read as follows:

The Parliament of the Commonwealth of Australia offers warm congratulations to the Lieutenant-Governor, the Legislature and the people of the Isle of Man on the occasion of the Millennium of Tynwald and extends best wishes for the future prosperity of the Isle of Man.

page 20

LEGISLATIVE ASSEMBLY OF NORFOLK ISLAND

Mr SPEAKER:

-I inform the House that I have received a copy of the resolution agreed to by the Legislative Assembly of Norfolk Island on the occasion of the presentation of a clock and sand-glass by the Commonwealth Parliament. The resolution reads as follows:

We, the Members of the Legislative Assembly of Norfolk Island, express our thanks to the Senate and the House of Representatives of the Parliament of the Commonwealth of Australia for the clock and sand-glass which they have presented to the Assembly. Their interest in the development of

Norfolk Island and the aspirations of its people has been evidenced by the presence here today of their Presiding Officers, and we accept this gift as a further earnest commitment to their continuing concern.

page 21

DEFENCE FORCES RETIREMENT BENEFITS FUND

Ministerial Statement

Mr KILLEN:
Minister for Defence · Moreton · LP

. For the information of honourable members I present the second report by the Defence Forces Retirement Benefits Board, together with a companion report to the Board by the Australian Government Actuary, on the assets and liabilities of the Defence Forces Retirement Benefits Fund at 30 September 1972. 1 seek leave to make a short statment relating to the report.

Leave granted.

Mr KILLEN:

– In 1973 following a report from a joint select committee of the Parliament, legislation was introduced to establish the Defence Force Retirement and Death Benefits Scheme with effect from 1 October 1972. That scheme superseded the Defence Forces Retirement Benefits Scheme. Provision was made in the legislation for the assets of the Defence Forces Retirement Benefits Fund totalling over $160m at book value to be transferred to the Commonwealth. Under the new arrangements, the Commonwealth assumed responsibility for the payment of all future benefits to beneficiaries under the new and superseded schemes. An undertaking was given by the Government of the day to arrange an actuarial investigation of the fund, i.e., the Defence Forces Retirement Benefits Fund. Its purpose was to ascertain whether the assets transferred were more or less than was fair and reasonable to meet the fund liabilities assumed by the Commonwealth.

The administration of the affairs of the superseded scheme is vested in the Defence Forces Retirement Benefits Board. Its first report on the investigation which I tabled in the Parliament on 28 April 1976 dealt with DFRB pensioners at 30 September 1972. An amount in excess of $8m was distributed to eligible pensioners. The further report I have just tabled deals with contributors including first those transferred to the DFRDB scheme and second, those who contributed for portion of the period, 1 July 1964 to 30 September 1972, but with pensions falling due before 1 October 1972. The latter group participated in the 1976 distribution arrangements.

The report reveals that the value of the relevant assets attributable to transferred contributors was not more than was fair and reasonable to meet the fund liabilities assumed in respect of them. There are therefore no surplus monies available for distribution. It deserves to be clearly understood that this conclusion has been reached by an actuarial investigation of the fund, a report by the Actuary and a consideration of that report by the DFRB board. These procedures are conducted on a completely independent basis.

Mr SCHOLES:
Corio

-by leave-The Opposition does not quarrel with the statement made by the Minister for Defence (Mr Killen). The Actuary has in fact reported that surplus funds do not exist. There will be considerable disappointment among a number of members who have been members of both funds and had some expectation that some distribution would take place. I do not think it is unrealistic to say that those who did in fact transfer from the Defence Forces Retirement Benefits Fund to the Defence Force Retirement and Death Benefits Scheme would have obtained substantial benefit from that transfer and from the introduction of the new fund, far in excess- I would have thought- of the possible excess contributions that they may have made prior to the introduction of the new scheme under the terms of the new scheme, had it been applied in retrospect, which I am not sure is a good policy. However, there is still an outstanding matter arising from the change in the fund. The Prime Minister (Mr Malcolm Fraser) has given undertakings that he would make certain alterations to the fund, and the Government has indicated that it has had them under study for some time. The people who expect those alterations are becoming doubtful that they will ever take place.

During the period 1975 to 1977 a former member for Herbert in this House, Mr Duke Bonnett, was given the responsibility of operating as a committee of one to inquire into the disadvantages of pensioners under the DFRB scheme as compared to persons who retired subsequently under the new scheme, especially in the period shortly after transfer. Mr Bonnett completed his report and presented it to the Prime Minister, after he had ceased to be a member of this Parliament. I understand that he still had the imprimatur of the Government and the Prime Minister, in that it was a governmentsponsored inquiry. I point out to the House that Mr Bonnett had to pay for his own typing and assistance as the Government refused to provide even basic reimbursement for his work in preparing the report for the Government. I think that is just an indication of the petty meanness which most governments would not indulge in. Apparently the present Prime Minister did not want the report and therefore did everything possible to make it difficult to be presented.

The fact is that the report has now been in the hands of the Government for over 18 months. No indication has been given to anyone as to whether the report will be acted upon and whether those retired persons, who are under substantially reduced conditions compared to persons who retired under the new scheme, will in fact have the anomalies removed. The difference in pension between that of a person who retired on 1 January 1974 and that of one who retired on 1 December 1972 is up to $2,000 a year, even though the rate of contribution for the latter was higher in comparison to his salary at that time. The Government has an obligation to consider the report which the Prime Minister authorised and that the parties informing the Government approved. If the Government intends to reject the report it ought to say so. If it does not intend to reject the report it ought to indicate what action it will take. Persons who retired from the defence forces in 1972 or earlier are getting older and if the Government waits long enough it will not have to act on the report; there will be no one left as a beneficiary of the fund. I ask the Minister for Defence to take these matters into consideration. I understand that the Prime Minister has the carriage of that report and I seek from him an undertaking that he will consider it. If it has been considered I ask him to act upon it.

page 22

REMUNERATION TRIBUNAL

1979 REVIEW

Ministerial Statement

Mr John McLeay:
Minister for Administrative Services · BOOTHBY, SOUTH AUSTRALIA · LP

– Pursuant to section 6 of the Remuneration Tribunal Act 1973 1 present the Remuneration Tribunal Review 1979. This report was distributed to honourable members during the adjournment. I seek leave to make a short statement.

Leave granted.

Mr John McLeay:
BOOTHBY, SOUTH AUSTRALIA · LP

– I shall be introducing legislation to give effect to changes to the Tribunal ‘s determinations which I announced on 20 June, as soon as is practicable. These changes will apply to automatic adjustment of members’ and senators’ salaries on a twice yearly basis, and to the increases determined for Ministers and office holders of the Parliament. In the case of private members and senators, the Tribunal took into account the 4 per cent national wage increase of December 1978 and determined a new basic rate of $26,720. The Government is prepared to accept this rate and the increase flowing from the last national wage case decision, but it could not agree to the Tribunal’s proposal that national wage case decisions apply automatically, that is, under present arrangements, twice yearly adjustments. Steps will be taken to ensure that automatic application of national wage case decisions on a twice yearly basis will not apply.

The Tribunal also proposed increased salaries and allowances for Ministers and office holders of the Parliament. In some cases, these go well beyond what indexation would have yielded. While the Government recognises that the objective of the Tribunal was to see some readjustment of relativities in this field it is unable to accept the proposals. To do so would have the effect of granting proportionate increases greater than those received by the majority of Australian wage and salary earners. Accordingly, the Government will take steps to increase present salaries for Ministers and parliamentary office holders only for indexation increases since the last review, including any increase flowing from the last national wage case decision.

Mr LIONEL BOWEN (KingsfordSmith) by leave- The Opposition notes what the Government has said. It gives us a chance to indicate again that the Government is using some sort of confidence trick by saying that full indexation must not be granted to people in this country when they are earning their living. It has become a ploy of the Government to suggest that members of the Parliament and others are pacesetters in that area. I am happy to advise members of the Parliament that if they look at the report they will see that the members of the Remuneration Tribunal are not at all persuaded by this illogical argument. In fact, they point out that the remuneration of others, particularly in State administrations and local government, is far and away above what is paid to office holders, members of Parliament, judges and others in the Federal sphere. They also advert to the fact that people in Qantas Airways Ltd and the Commonwealth Bank are leaving those statutory organisations because they can look after themselves better in the private sector.

The point we wish to make as an Opposition- we do not wish to emphasise it too much- is that there is always a chance for a Prime Minister or an Executive to play politics by saying: ‘I am going to set an example by not taking the increase’. Let us have a look at the assets and other income of many of these gentlemen. They are very substantial indeed. These gentlemen would not require any increase. We want to try to establish the principle that the Parliament should not try to set its own members’ salary. We believe that it should be referred to a tribunal. We believe that evidence should be given to that tribunal and when the tribunal makes a decision the Parliament should stick with that decision. Why have a situation where one can play politics, as can happen, by coming in and saying: ‘The Tribunal has all the evidence. It has heard our submissions. But we are not going to agree with what it has decided’? I do not think that anybody in the country would agree with that. It does not do us justice at all. From the point of view of the people outside it does not give the Parliament any dignity or credibility.

It is the Opposition’s considered view that, this matter having been submitted to a tribunal, there should be no power of disallowance. This affords an opportunity to go and argue the case before a tribunal. I note with interest -

Mr Baillieu:

– You disallowed it for 1975.

Mr LIONEL BOWEN:
KINGSFORD-SMITH, NEW SOUTH WALES

-I do not think that we made the right decision. Let us put it on record; do not let us hide it. I want to make a further point. Twice-yearly indexation is not going to be adhered to, just because that has been recommended by the Tribunal. We can relate it directly to the fact that the Government has failed to adhere to its promises in respect of pensioners. That was the sole reason for this decision. I hope that twice-yearly indexation of pensions will be restored this evening. Let us hope that this Government gets back to some of the promises that it has broken. Most of the objections to any increases in parliamentary salaries were directly related to pensioners. A number of pensioners made protests. I note with interest that those protests were forwarded to the Government by the Tribunal; so they must have done some good. Some 157 pensioners protested on the issue of not getting twice-yearly indexation. That is the point that the Opposition wishes to make.

Why not agree with what the Tribunal has said? It should not be interfered with because we get into the realm of politics where people who are very well endowed and are occupying senior positions will say: ‘We will be pacesetters’. This is nonsense. Nobody outside cares a tinker’s cuss as to what happens, provided it is decided in a fair and proper fashion and provided evidence can be given. I would invite some of the editors who write these editorials to get into the witness box in front of the Tribunal, where some of us could ask them a few questions as to their rate of salary and their behaviour. All we ever get from them is a downgrading of the Parliament. In order to get an effective Parliament we must attract the best people. They are not going to come on the basis that they are wealthy people; they are entitled to come on merit.

Finally, let me have a look at another matter which is of concern. It relates to the Opposition. We made a submission, which we again make, as to the staff to which the Opposition feels it is entitled. We should at least be able to match some of the resources of the Government which has all the bureaucracy and administration right behind it. While Ministers might need substantial aid, they get plenty of staff to help them. The Opposition has to try to match them with very limited staff indeed. In 1978 we made a recommendation to the Tribunal with which the Tribunal agreed, but it was not adhered to by the Prime Minister (Mr Malcolm Fraser). The Prime Minister made an administrative decision that the Tribunal’s decision was not right and cut back the staff of the Opposition, despite the fact that he has increased his own staff, allegedly on the basis of increasing his standing in public life. He has a special Press group that is conducting a public relations exercise. He ought to dismiss the whole lot of them because his popularity rating is down to 29 per cent. From our point of” view we still have to try to match the resources of the bureaucracy and everybody else who is able to help the Government. This point is adverted to in the report. Paragraph 35 of the report of the Remuneration Tribunal reads:

In the 1978 Review the Tribunal expressed the view that shadow Ministers should be provided with an additional member of staff, such staff member to be employed under the terms and conditions which applied to electorate assistants. This was implemented only in part. We reiterate that we see a need for the additional staff as then recommended.

I suggest that the Government, and in particular the Prime Minister, review these considerations. Let him forget about the Boeings and other things that he is now giving to himself, and talk about facilities for a democratic Opposition.

Mr Baillieu:

– Come on!

Mr LIONEL BOWEN:

-I am coming on, on the basis of what people think. While I come on, the honourable member may go out if he is not careful. It was on the basis of economic management that we could not get this staff. Yet the Government squanders millions on resources for the Prime Minister who made that decision. I would say that if he had put the same proposition to his back bench it would not have been agreed to. These decisions are made in one office and they are deemed to be the decisions of a government. They are not. I doubt whether any one of the honourable members opposite has ever discussed them in the party room. It is on that basis that the Opposition raises this objection. Every honourable member opposite knows that what I am saying is fair and reasonable and that not one of them has had the chance to discuss it. If honourable members opposite want to run along with the one-man band proposition, that is thenproblem; it is not ours. On that basis I say that in future we want decisions of the Remuneration Tribunal adopted without any further debate in this Parliament and we should not have this nonsense about so-called or phoney pacesetting legislation that is going to affect the standard of living outside. We know that the Government does not want the workers to get an indexation increase. We do. To use parliamentarians and others as pacesetters is a phoney exercise.

Mr KEVIN CAIRNS:
Lilley

-by leave-I express some degree of surprise at the statement that has been made. I did not know that the statement was to be made today, but of course that could be in accordance with the normal processes of the House. I would have liked the statement to have been discussed with the Government Members Committee before it was made. That would have been a part of the normal process. One would hope to look at the legislation when it is introduced.

Mr DONALD CAMERON:
FADDEN, QUEENSLAND · LP

-by leave- As a member of the Parliament and as a member on the Government side of the Parliament, I am not stating any opposition to the decision that was taken some weeks ago in relation to this matter. However, as a private member on the Government side I believe that at the very least there should be some consultation with members on this side of the House before arbitrary decisions such as this are taken on our behalf.

Mr SCHOLES:
Corio

-by leave-The statement made by the Minister for Administrative Services (Mr John McLeay) is incorrect in that it says that the Government cannot agree with indexation. The recommendation of the Remuneration Tribunal is that the decisions in the national wage case be applied in the terms in which the national wage case decisions are given, which is not indexation in the true meaning of the word. The other remark I make relates to the provision of staff for the Opposition. The Prime Minister (Mr Malcolm Fraser) reduced by six the number of persons recommended by the Tribunal. He allocated five persons to the back bench of the Government, which was not recommended by the Tribunal. Therefore those staff members are additional to those made available to the Opposition. He then changed the terms under which the appointments of staff were to be made in such a way as to make the financial obligations on the Government similar or more than would have been the case had he implemented the Tribunal’s recommendations. It was not a cost saving exercise; it was an exercise in semantics. He exceeded the Tribunal’s recommendations in relation to Government members. I do not object to what was done in that regard. However, he refused to implement the Tribunal’s recommendations in relation to the Opposition. Had he done so it would have meant no additional cost to the Government.

page 24

BILLS RETURNED FROM THE SENATE

The following Bills were returned from the Senate without amendment or requests:

Australian Federal Police Bill 1979

Taxation Administration Amend ment Bill 1979

Estate Duty Assessment Amendment Bill 1979

Gift Duty Assessment Amendment Bill 1 979

Income Tax Assessment Amendment Bill (No. 3) 1979

Pay-roll Tax Assessment Amendment Bill 1979

Pay-roll Tax (Territories) Assessment Amendment Bill (No. 2) 1979

Live-stock Slaughter Levy Amendment Bill 1979 Live-stock Slaughter Levy Collection Amendment Bill 1979

Live-stock Export Charge Amendment Bill 1 979 Australian Meat and Live-stock Corporation Amendment Bill 1979

Meat Research Amendment Bill 1979 Wine Grapes Levy Bill 1979 Wine Grapes Levy Collection Bill 1979 Wine Grapes Charges (Repeal) Bill 1979 Wine Overseas Marketing Amendment Bill 1979 Customs Tariff Amendment Bill 1979 Excise Tariff Amendment Bill 1979 Bounty (Injection-moulding Equipment) Bill 1979 Bounty ( Books) Amendment Bill 1979 Bounty (Rotary Cultivators) Bill 1979 Bounty ( Bed Sheeting) Amendment Bill 1 979 Bounty (Dental Alloys) Bill 1979 Bounty (Paper) Bill 1979 Customs Tariff Validation Bill 1979 Excise Tariff Amendment (No. 2) Bill 1979 Customs Tariff Amendment (No. 2) Bill 1979 Commonwealth Employees (Redeployment and Retirement) Bill 1979

Health Insurance Amendment Bill 1979 National Health Amendment Bill 1979 Supply Bill (No. 1) 1979-80 Supply Bill (No. 2) 1979-80

National Railway Network (Financial Assistance) Bill 1979

page 24

ASSENT TO BILLS

Assent to the following Bills reported:

Wool Industry Amendment Bill 1979 Wool Tax Amendment Bill (No. 1) 1979 Wool Tax Amendment Bill (No. 2 ) 1 979 Wool Tax Amendment Bill (No. 3) 1979

Wool Tax Amendment Bill (No. 4) 1 979 Wool Tax Amendment Bill (No. 5 ) 1 979 Wheat Industry Stabilization Amendment Bill 1 979 Wheat Industry Stabilization (Reimbursement of Borrowing Costs) Bill 1979

Income Tax (Rates and Assessment) Amendment Bill 1979

Atomic Energy Amendment Bill 1979 Live-stock Slaughter (Export Inspection Charge) Bill 1979

Live-stock Slaughter (Export Inspection Charge) Collection Bill 1979

Grain (Export Inspection Charge) Bill 1979

Grain (Export Inspection Charge) Collection Bill 1 979

Wool Industry Amendment Bill (No. 2) 1979

Excise Amendment Bill ( No. 2 ) 1 979

Qantas Airways Limited (Loan Guarantee) Bill 1979

Commonwealth Employees (Redeployment and Retirement) Bill 1979

Health Insurance Amendment Bill 1979

National Health Amendment Bill 1979

Supply Bill (No. 1) 1979-80

Supply Bill (No. 2) 1979-80

National Railway Network (Financial Assistance) Bill 1979

National Parks and Wildlife Conservation Amendment

Bill 1979 Australian Federal Police Bill 1979 Taxation Administration Amendment Bill 1 979 Estate Duty Assessment Amendment Bill 1 979 Gift Duty Assessment Amendment Bill 1979 Income Tax Assessment Amendment Bill (No. 3 ) 1 979 Pay-roll Tax Assessment Amendment Bill 1 979 Pay-roll Tax (Territories) Assessment Amendment Bill (No. 2) 1979 Wine Grapes Levy Bill 1979 Wine Grapes Levy Collection Bill 1979 Wine Grapes Charges ( Repeal ) Bill 1 979 Wine Overseas Marketing Amendment Bill 1 979 Bounty (Books) Amendment Bill 1979 Bounty ( Rotary Cultivators ) Bill 1 979 Bounty (Dental Alloys) Bill 1979 Bounty (Paper) Bill 1979 Live-stock Slaughter Levy Amendment Bill 1 979 Live-stock Slaughter Levy Collection Amendment Bill

1979

Live-stock Export Charge Amendment Bill 1 979 Australian Meat and Live-stock Corporation Amendment Bill 1979

Meat Research Amendment Bill 1979 Bounty ( Injection-moulding Equipment) Bill 1 979 Bounty (Bed Sheeting) Amendment Bill 1 979 Customs Tariff Amendment Bill 1979 Customs Tariff Validation Bill 1979 Excise Tariff Amendment Bill 1979 Excise Tariff Amendment Bill (No. 2) 1979 Customs Tariff Amendment Bill (No. 2) 1979 Judiciary (Diplomatic Representation) Amendment Bill 1979

States Grants (Schools Assistance) Amendment Bill 1 979 States Grants (Tertiary Education Assistance) Amendment Bill 1979

page 25

TAXATION

Discussion of Matter of Public Importance

Mr DEPUTY SPEAKER (Mr Millar:
WIDE BAY, QUEENSLAND

-I have received a letter from the honourable member for Blaxland (Mr Keating) proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The use of a selective and disguised S2,000m petrol tax on motorists to hide the real impact of the Prime Minister’s high tax policies.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the Standing Orders having risen in their places-

Mr KEATING:
Blaxland

-The Opposition raises as a matter of public importance the following matter:

The use of a selective and disguised $2,000m petrol tax on motorists to hide the real impact of the Prime Minister’s high tax policies.

We raise this matter of public importance because we think it is about time the Prime Minister (Mr Malcolm Fraser) and the Government were brought to book for masquerading as a low tax government. In fact the opposite is the case. The Prime Minister and the Government have indulged in tax policies which have moved from direct income taxation to indirect taxation. Such policies unfairly impinge on low and middle income earners and penalise them differentially in comparison with people on higher incomes. During the three years the Fraser Government has been in office taxation receipts as a percentage of gross domestic product have been significantly greater- I want to stress that point- than was the case under the Labor Government in the three years between 1972 and 1975.

The myth is that this Government is a low tax government. Of course it is not. It is a high tax government and the Prime Minister has tried to dupe the public by saying that he has kept taxes down. He wants the public to believe that he is a tax cutter when in fact the opposite is the case. There has been speculation in newspapers of recent days that in tonight’s Budget some personal tax cuts may be announced or that tax indexation may again be taken aboard.

Mr Baillieu:

-Or both.

Mr KEATING:

– Or both. The Prime Minister may do those things in an attempt to regain credibility from his base of 29 per cent acceptance by the Australian public in relation to the way in which he is handling his job and in an attempt to convince the public that he is keeping promises, practically all of which have been broken. Promises made by the Prime Minister in a number of election campaigns have been broken quite unashamedly. This has been done in clear view of the public, so the public is aware of his actions. Now the Government is contemplating attempts to regain credibility. After all, it has a Prime Minister who cannot be believed. Nobody can believe the present Prime Minister.

The Government is thinking about going into an election campaign with a leader the public does not believe. It intends to look at ways in which to gild the lily with taxation cuts after it has collected $2,200m in tax from the motorist.

Let us look at the way in which the Government has operated. It has put the emphasis on indirect taxation. The public will remember that in last year’s Budget the price of whisky increased from $5 or $6 a bottle to $ 1 1 or $ 12 a bottle. The price of beer and cigarettes increased. All of these increases were in the form of indirect taxation. The Government in its mini-Budget abolished the 40 per cent subsidy for health insurance. So the costs have been borne by the public by way of indirect taxation.

The greatest increase by way of indirect taxation has been in the case of petrol. In the three years that the Fraser Government has been in office the price of petrol has risen by 100 per cent; it has gone from 60 cents a gallon wholesale to $1.20 a gallon. Since Mr Fraser has been Prime Minister the average motorist with a 12-gallon tank has paid an additional $7.20 per tank full of petrol. I will put it another way. This year Australian consumers will spend about $3,000m for products from oil produced in Australia. Of that $3,000m, $2,500m will go straight to the Fraser Government’s tax coffers. It will be collected by way of the crude oil levy.

The public may be at a loss to understand how this subterfuge or sleight of hand has been worked on them. It has been done very simply. The public may believe that the Organisation of Petroleum Exporting Countries or the Arabs in the Middle East are responsible for this policy. In fact Australia is dependent on imports for only one-third of its crude oil requirements. So we must pay the going world price for one-third of our requirements. However, for the other twothirds we can pay whatever price the Government determines. Until three years ago the price was $2.09 a barrel. The Government has now determined that the Australian public will pay the equivalent of $18.66 a barrel. It has done this by the hoax of implementing a policy of import parity in respect of old discoveries.

In other words, the Government, by the existence of a low cost oil field in Bass Strait, has the option of deciding the proportion of the value of import parity it may charge for oil produced in Australia from a low cost oil field. It has decided to give the producers $5 a barrel and to keep $ 1 3.66 a barrel for itself. From that $5 a barrel, $2 is collected by way of company tax. So the Government keeps $ 1 5. 66 for itself and gives the producers $3. This has nothing to do with the Arabs; it has nothing to do with OPEC. It was a decision made by the Fraser Government, resulting from its obsession with the Budget deficit, to collect $2,200m. Until the latest OPEC increases the rate of collection was about $ 1 ,250m in a full year. When the increases from the OPEC states became effective, the Government thought that it was an opportunity to grab another $900m and to blame it on the Arabs. So the Government announced that two-thirds of domestically produced oil would be charged for at the world price. Once again the motorists and farmers would pay through the nose. As a result of that decision the Government gained $850m. Perhaps tonight it will give back a little of that money. But if it does so it will not be done against the backdrop of election promises. All the Government will be doing is taking $2, 200m with one hand and giving back a small proportion of it with the other hand. So if the Treasurer (Mr Howard) does any gladhanding tonight let it be clearly understood that no real return of moneys will be made to the Australian public.

In addition to the $2,200m that the Government is collecting, it collects $95 lm from what is called the refined products excise; that is, the ordinary pump tax which always has been imposed on petrol. So the Government is collecting $2,200m on crude oil, $95 lm on petrol, $250m on company tax from the windfalls and $100m on company tax from the revenue from Bass Strait. On one commodity alone- oil, petrol and petroleum products- the Government is collecting $3,400m.

The Australian motorists who are listening to the broadcast of this debate while driving home in their cars and the farmers who are listening to it on their farms should know clearly now that the Government is getting 1 1 per cent of its total budgetary receipts from one commodity alone. Since this Government has been in office it has collected roughly $2,500m more from petrol. The rising costs, the inflationary impost and the crushing burden upon the lower income earners of indirect taxes by way of petrol price rises are of course the express policy of the Fraser Government. It does not have to charge the world price for the oil produced in Australia, which is two-thirds of Australia’s consumption of oil. It does so simply to enable it to hide behind the subterfuge that the prices are being increased by the Arabs, that this selective and disguised tax of $2,200m is caused by the Arabs. It is caused by the Fraser Government’s rapacious greed for budgetary revenue.

It is worth recounting simply the way in which the Fraser Government has spent money since it has been in office. It put itself up as a low spending, low tax government. In fact, Budget outlays as a proportion of the gross domestic productthat is the only way one can look at them- have increased in real terms from the 28. 1 per cent average during the three years of office of the Whitlam Government to 30 per cent now. The same has been done with taxation receipts. This Government is the highest tax government Australia has ever had- in real terms, not in money terms. The Government will collect roughly an additional $ 1,000m by way of the crude oil levy just from the middle of this yearnot from before that, just from the latest increases. It will receive $850m and the company tax on the windfalls to the Bass Strait producers. That $ 1,000m represents $200 in taxation for every civilian employee in Australia. That is not just a small proportion or a surcharge; it is $200 per annum for every civilian employee from that increase. That is apart from the additional $ 1,300m imposed before the recent increase; it involves just the increases since May- June of this year. Honourable members opposite should be ashamed of themselves as a government. They masquerade as members of a low-tax government when in fact they are slugging the backside off every motorist and consumer of petroleum products in Australia and placing the burden of revenue raising more and more upon indirect taxes.

The switch to the imposition of indirect taxes is a tragedy. Indirect taxes are indiscriminate. No assessment is made of one ‘s capacity to pay. That means that low income earners, the small person with his motor car or even small farmers and small businessmen alike, are paying through the nose by way of indirect taxes on petrol. If that kind of tax were levied according to one’s income it would be assessed on the person’s capacity to pay. Instead of that the low income earner, as always, is hit the hardest. This is the product of the policy of the present Fraser Government. The move to import parity supposedly was applied in the interest of the conservation of oil. The Government said that it was increasing the price, otherwise people would use the oil too quickly. What has happened? In fact there has been no drop in consumption. The latest figures released by the Bureau of Statistics- the ones for the first four months of this year- show that the consumption of petroleum products increased by 5.2 per cent over the same period in 1978. The Department of National Development- the Minister for

National Development (Mr Newman) is not here to answer the charge, by the way- predicted that demand would grow by 2.7 per cent.

All the petrol companies are planning for higher and higher consumption in the next 12 months. They do not believe that the crude oil levy will retard consumption. The measure was introduced simply to raise revenue because of the Prime Minister’s obsession with the Budget deficit. The Government might have been able to cover the Budget deficit this year but then came the windfall of the price increases agreed to at the meeting of the Organisation of Petroleum Exporting Countries in Vienna in June and July. Once the increases were announced the Government saw that it could raise another $800m or $900m in tax in a full year and that this gave it certain budgetary options. No doubt tonight the Treasurer will make great play of any small handouts that the Government makes. Let the public understand clearly that even if the speculation is true Australians will not get anything like the amount that the Government has collected by way of the crude oil levy, the refined product excise or any of the indirect taxes which have operated in the last 12 months.

The Government speakers who are to follow me in this debate will be back bench members. I see the Minister for National Development entering the chamber. I do not think that he will speak in this debate. He indicates that that is so. The Government will not even answer this charge. It will not even defend itself. It will put up two obscure back bench members, who will not be here after the next election, to answer the case. No Minister will front to answer it. The Minister for National Development is on the edge of ministerial failure and of being removed from his office by the Prime Minister. He is a disgrace to his team. He has let it down through his incompetence. The Treasurer will not come into the chamber to explain to the public why the Government is collecting S2’A billion in taxes from motorists and the consuming public.

This levy is a massive sleight of hand. It is tax by stealth, blaming the Arabs when in fact the Government has made a decision to link the OPEC price with the official price being paid by Australian refineries for oil produced in Australia for 65c- not dollars, cents- per barrel. Oil from Bass Strait is produced from the big fields at 65c per barrel and the Australian public is charged $18.66 per barrel. In other words, we can say that most of Australia’s oil is produced at around $ 1 per barrel and the public is charged $18.66 a barrel. The Liberal Party has broken its commitment to the Australian public about being a low tax party. It is the highest tax party in Australia’s history. The Fraser Government is the highest tax government in Australia ‘s history. It is also a dishonourable government as it does not keep promises. It may try to discount the damage which has been done by in some way handing back a minute proportion of the massive collections it has taken by stealth from the motorist.

Mr DEPUTY SPEAKER (Mr Millar:

Order! The honourable member’s time has expired.

Mr COTTER:
Kalgoorlie

-It was amazing to listen to the pipe-dreams of the honourable member for Blaxland (Mr Keating). The Government makes no apologies for its fuel pricing policies and its energy policies. At least we have comprehensive pricing policies in the energy field. The Opposition has no such policies. Not one item which came from the lips of the honourable member for Blaxland gave a positive indication of a policy which the Australian Labor Party or a Labor government would put forward in future. The Labor Party has no policies at all relating to pricing. The only possible alternative would be rationing or shortages of fuel. There is no doubt that the honourable member for Blaxland, in all his ramblings, ravings and dreamings, had nothing positive to say. He has been living in dreamtime. He has been out on cloud nine somewhere. There are no worries about our policy. It is very comprehensive and positive, unlike the dreamtime policy of the Opposition.

Mr Keating:

– I raise a point of order. Is the honourable member for Kalgoorlie telling all his constituents that he is in favour of higher petrol prices?

Mr DEPUTY SPEAKER (Dr Jenkins)Order! There is no point of order.

Mr COTTER:

-I am telling all my constituents that the Labor Party Opposition has no positive policy on energy or the pricing of fuels.

Mr DEPUTY SPEAKER:

-Order! I remind the honourable member that he is addressing the House and that he should confine his remarks to the House.

Mr COTTER:

-Thank you, Mr Deputy Speaker. The policies of the present Government at least have reversed the downtrend in exploration and have caused a revision of our estimates of fuel reserves in this country. It is a well known, historic fact that the policies of the previous Government resulted in a severe downturn in our oil reserves. Exploration almost stopped dead in its tracks. No oil exploration was being carried on at the end of 1 975 and early in 1 976. It is only because of our revised and positive policies that exploration again has picked up.

Mr Wallis:

– How many wells?

Mr COTTER:

– In 1978, 52 wells were drilled. In 1979 no fewer than 52 wells will be drilled and probably in excess of 80 or 90 wells will be drilled. If people look at the situation they will see that the positive policies of the Government have resulted in the known reserves of oil in this country being greatly increased. As this Government’s pricing policies have progressed, it has become economic to extract the uneconomic reserves of between 600 million and 700 million barrels of oil. That 600 million or 700 million barrels of oil that this country was not able to take out of the ground will now be taken out and they will form part of our reserves.

On top of our positive policy in pricing, energy resources and conservation, a research and development program is under way. This will lead to further development of alternative energy sources. It will also lead to further development of our oil reserves. The people of Australia well and truly recognise that living in a dreamtime of cheap fuel prices is completely unrealistic. They realise that fuel has to be paid for and they also realise that without an escalation in fuel prices, as we have seen in more recent times, we would be desperately short of oil in this country.

Mr Dawkins:

– Who wrote this speech?

Mr COTTER:

-This is quite amazing Mr Deputy Speaker. We on this side of the House permitted the honourable member for Blaxland to be heard in silence. I would hope that members of the Opposition would return the compliment.

Mr Keating:

– No you didn’t. Baillieu cackled all the way through it.

Mr DEPUTY SPEAKER (Dr Jenkins)Order! The House will come to order.

Mr Dawkins:

– Where are your supporters? You have not got any. Who is listening?

Mr DEPUTY SPEAKER:

-Order! The honourable member for Fremantle will remain silent.

Mr COTTER:

-Thank you, Mr Deputy Speaker. It is of the highest importance that the price of petroleum products should be at a realistic level allowing the pricing system to work. This realistic pricing level will encourage the conservation of scarce sources of energy, particularly liquid fuels other than liquefied petroleum gas. It will promote the use of available energy sources, mainly natural gas, LPG and coal. It will stimulate commercial development of major new energy projects such as shale oil. We have seen intense interest in developing Australia’s massive shale resources. The pricing level will allow development of coal liquefaction and of the ethanol and methanol industries. All of these things are positive moves taken by this Government. The Labor Opposition has not put forward one positive alternative.

It is important to remember that notwithstanding the import parity pricing of oil, Australians still pay much less for petroleum products than consumers in most Western countries. For example, to show just how unrealistic some members of the Opposition are, I point out that recently I was in several member countries of the Association of South East Asian Nations. For instance, I saw that in Korea the price of petrol was the equivalent of $A4 a gallon; in Thailand it was about $A2.50 a gallon; in the Philippines it was about $A2.50 a gallon and in Hong Kong it was over $A2 a gallon. So other countries fully realise the value of having a realistic fuel price. There is no question that Australia’s policies are, in fact, the envy of many countries. America wishes it had bit on the bullet some two or three years ago in respect of fuel prices and energy conservation. Today America is trying desperately to move towards some semblance of the policy which Australia adopted some two or three years ago.

This Government’s energy decisions are based on realistic prices for petroleum products. Countries which have been slow to face up to the reality of higher prices for oil have experienced shortages as a result of the world oil situation. We witnessed long queues and even shootings in California because of oil shortages in America. The honourable member for Blaxland said that we do not need to raise our prices beyond the 1974 level. He said that we could run the Australian oil industry at the 1974 level. If we adopted that approach there would be desperate shortages, today. People would have to queue for petrol and the farming, rural and manufacturing industries would be brought to a grinding halt. Perhaps that is the objective of the Australian Labor Party.

Australia has no options. Like all industrial nations, it is heavily dependent on oil as an energy source. It is inevitable that consumers either will have to pay world parity prices for domestic crude oil or they will have to pay for imported crude oil. In the former case, we encourage exploration and development of our own resources. In the latter, we become dependent on foreign suppliers. In either case we will be paying world parity prices. That is the point that seems to have escaped the Opposition. Again I say that we make no apologies whatsoever for our present pricing policy. It has had a beneficial effect on the conservation of fuel in this country. Apparently many people do not realise how short our oil reserves really are. Unless we are able to conserve oil and establish new reserves we will be in pretty desperate straits in a few years time.

As far as the amount of money that we have been able to pay into Consolidated Revenue from the fuel levy is concerned, I wonder whether the honourable member for Blaxland and the Opposition are in favour of continuing the 1974 oil prices. In so doing, this would deprive the pensioners of Australia of increased benefits, because approximately 40 per cent of the money that is gathered from the fuel levy is expended on social welfare payments. Is the honourable member in favour of halving payments made to the people who are unemployed? Would he be in favour of raising personal income taxes substantially? I think that is probably the alternative that the honourable member is looking at. It is my opinion that the taxpayers of Australia are paying far too much personal income tax and for the honourable member for Blaxland to advocate higher taxation, lower pensions and lower social welfare payments is absolutely unacceptable.

In addition to the Government’s pricing policies we have also established several new initiatives in the conservation of fuel. We have dropped the octane rating on supergrade motor spirit from 98 to 97 and the Commonwealth Government has requested the New South Wales and South Australian Governments not to proceed with the third stage of the emission control legislation because it would have a fuel penalty of between 3 per cent and 5 per cent. The Labor Party supporters obviously dislike the people who live in remote areas and in clean air areas. They have no thought for the penalty that they impose on people who live in rural areas and remote areas of Western Australia. They have no time for the farmers, no time for the fishermen and no time for the people who have no problem at all with air pollution. Because Sydney has an atmospheric problem in that it suffers atmospheric pollution, members of the Labor Party want to penalise the rest of the nation simply to clean the air of Sydney. But what they forget about the problems of Sydney is that all sorts of other industries and machines are putting harmful emissions into the air. The oil refineries and the humble two-stroke lawnmower put a considerable amount of pollution into the air of Sydney. Yet no thought is given by the honourable member for Blaxland at looking at emission controls and at other methods of cleaning the air of Sydney.

The honourable member for Blaxland goes on about using $2,000m in petrol taxes to benefit the Australian taxpayer. He reckons that that is not a good thing. I ask the honourable member: What would be the alternative area of expenditure for the income that has been raised?’ Would he advocate that the oil companies reap the benefit of that huge increase in oil prices? Would he advocate that the oil companies run off with that sort of money and that the pensioners and the unemployed people of Australia should suffer, while the taxpayers of Australia suffer even more? The answer is no. I put it to honourable members that the honourable member for Blaxland does not have any positive ideas; he does not have a positive policy that could be put forward as a comprehensive energy and pricing policy in Australia.

Mr Keating:

-That is the last time the Government will put you on.

Mr DEPUTY SPEAKER (Dr Jenkins)Order! The honourable member for Blaxland should set an example. I call the honourable member for Kalgoorlie.

Mr COTTER:

-Thank you, Mr Deputy Speaker. The honourable member for Blaxland is obviously performing like a political vandal at the moment with no thought at all for the question before the House. This Government has taken positive strides in this area. It has a positive policy. It is not ashamed of what it has done. It is utilising the income from that additional fuel tax in most comprehensive and sensible ways. It would not be a party to allowing the fuel companies to rip off huge extra amounts of money, nor would it see the taxpayers or the pensioners of Australia suffer.

Mr John Brown:
PARRAMATTA, NEW SOUTH WALES · ALP

– I almost feel sorry for the honourable member for Kalgoorlie (Mr Cotter); not only is he staring defeat right in the face in the forthcoming general election, but as somebody has suggested, he apparently drew the short straw and has had to stand up in this chamber and defend a policy that the Minister for National Development (Mr Newman) will not defend because it is totally indefensible. The motion moved by the honourable member for Blaxland ( Mr Keating) reads:

The use of a selective and disguised $2,000m petrol tax on motorists to hide the real impact of the Prime Minister’s high tax policies.

That is exactly what we are trying to establish here now. Three definite facts have emerged. Firstly, and nobody from the Government side will deny this, within three years the price of petrol in Australia has doubled. As the honourable member for Blaxland has pointed out, the farmers are probably listening to the parliamentary broadcast this afternoon. However, I might add that there is not one member of the National Country Party in the chamber. I should have thought that petrol pricing would have been a most important policy as far as the National Country Party was concerned. Surely if doubling the price of petrol affects anybody it is the farmers, yet there is not one of their worthy representatives in this chamber to defend them. Where are they? Perhaps they are out defending the Minister for Primary Industry (Mr Sinclair). Perhaps they are helping him with his tax return.

The honourable member for Kalgoorlie told us that the price of petrol in Hong Kong is higher than in Australia. I am sure that the people of the electorate of Kalgoorlie who have to drive a thousand miles would be very concerned to learn that somebody in Hong Kong who has to drive only five miles is paying a bit more for his petrol! Hong Kong does not have a natural source of domestic oil. It has to import its oil, which is something that the honourable member for Kalgoorlie seems to have forgotten. So here we have the honourable member for Kalgoorlie, in a very doubtful seat, defending the Government’s most doubtful policy, to be supported by the apologist for the nuclear industry, the honourable member for Hotham (Mr Roger Johnston). For heaven’s sake, where are Government Ministers? Are they not prepared to defend this policy?

The simple fact is that the price of petrol has doubled within three years. The important point that we want to make to the public is that the Government has made a conscious effort to blame the Arab countries for this, to blame the Organisation of Petroleum Exporting Countries increases for the increase in Australian petrol prices. But such is not the case.

Mr Porter:

– Don’t you read the papers?

Mr John Brown:
PARRAMATTA, NEW SOUTH WALES · ALP

-Yes, I do read the papers but I read only the truth. I do not read what the Government has to tell us. The point I want to make is that Australia is in a most fortunate position. We have a 70 per cent production of oil within our own domestic capacities. We have to import only 30 per cent of our crude oil from overseas, and most of that 30 per cent comprises heavy industrial crudes anyhow. The simple fact is that almost 90 per cent of motor distillate used in Australia is refined from Australian crude. The Government has a vested interest in having the public believe that the Arabs are responsible for this hike in petrol prices. This has been reinforced by reports on television of a group of Arabs sitting down in Vienna and other places to determine what the world price for oil will be. This does not bear much relation to the situation in Australia. The fact that we have 70 per cent local production is a big reason why petrol should not be the price it is in Australia.

I notice the Minister for National Development smiling. I do not know what he is smiling about. I am sure that all the people who are listening to this broadcast and who are paying another $7 a tank for their juice will not be smiling. I am sure that they will not be confused if there are some handouts in the Budget tonight honouring the promise that we saw in the newspapers back in 1977, that fistful of dollars that pandered to human greed. I hope that the people do not think that any handout they might get tonight will be a fulfilment of that promise. It will simply be returning what the people are being robbed of when they buy a tank of petrol. So let us put that furphy to rest. It will be no great generous effort by the Government if it gives the people some tax relief tonight; it will simply be returning some of what the people have paid in the last three years in the form of higher petrol prices.

The honourable member for Kalgoorlie suggested that we on this side of the House do not have a positive policy with regard to petrol pricing or with regard to the petroleum industry. I advise the honourable member to get hold of the paper produced by the honourable member for Blaxland at our conference in Adelaide just recently. The honourable member for Blaxland pointed out in that paper that an Australian Labor Government would form, as is done in almost every other developed country with the exception of the United States basically, a national oil company to be known as the Australian Hydrocarbons Corporation. This Corporation would involve itself not only in exploration but also in the refining and retailing of petrol. And it would provide a governmenttogovernment basis for negotiation with the Arab countries. It would give the national government a real say in its energy policy, something which this Government badly lacks. The Minister for National Development would be the first to admit, privately I presume, that the Government has no real knowledge of what the energy situation is. The Government’s belief is: Leave it all to the oil companies; leave it all to the nine sisters. What a way to have one’s national future lined up, with the oil companies deciding what is going to happen.

I think a few figures are very telling. Seventy per cent of our oil is produced locally. It costs less than a dollar a barrel for producers, particularly Bass Strait producers, to produce that oil. So consumers are paying $18.66 a barrel for that oil which costs less than a dollar a barrel to produce. On average, with the 42 per cent that attracts world parity price and the 58 per cent of the total production that does not, the total return to the producer is $5. 12 a barrel while the return to the Government is $ 1 3.54 a barrel. So the companies get $5.12 a barrel for oil that it costs them $1 a barrel to produce, and of that $4 profit, the Government gets half anyhow. The simple facts are that the high cost of petrol in Australia is determined by the Government.

It is a conscious decision of the Government to make people pay more for their petrol in Australia in order to finance the booming deficit that it has developed because of its incompetence in economic matters. They are the simple facts. We are not paying a high price for petrol in Australia because of any OPEC decision. We are paying a higher price merely because of a conscious decision by this Government to hike up the price of petrol to cover its booming deficit. So let the furphy that it is the Arabs who have caused the high price of petrol in Australia be put to rest. It is a government decision and it is a government decision that the Government does not want to go back on.

In 1977 when the Government decided to move progressively towards world parity pricing we as an Opposition did not dispute this because we realised that the oil companies have to be encouraged to explore. The Government used as its rationale the fact that a higher price for petrol would provide some impetus for these companies to look for more expensive wells in Bass Strait and perhaps to explore in other areas. We did not dispute that. The other reason was that it would provide some sort of rationalisation of our use of petrol, that it might prevent the wasteful use of petrol. But that has not happened. The honourable member for Blaxland has cited the figures.

Mr Newman:

– He is wrong.

Mr John Brown:
PARRAMATTA, NEW SOUTH WALES · ALP

-The Minister’s own Department decided that the increase in petrol consumption this year would be 2.7 per cent whereas in fact it is 5.2 per cent; it has doubled. Exploration has not gone ahead despite the rantings and ravings of the honourable member for Kalgoorlie. Exploration in Australia is almost decimated. Only 19 new wells have been put down in the first half of this year. No oil has been discovered in Australia since September 1975.I repeat: There has not been one new oil discovery. So do not let us have this rubbish about the Government encouraging exploration or there being an improvement in exploration. It is a nonsense. The simple fact is that more oil has not been discovered and very little exploration is going on.

The fact is that the public is paying twice what it paid for petrol in 1975. This financial year the Government will get over $3,000m in revenue from the sale of petrol to the Australian public. This is $ 1,000m more than it got last year. This Government has plucked $ 1,000m out of the pockets of the Australian people by a sleight of hand and it wants them to believe that this has happened because of the Arab decision to raise the price of oil. It was a conscious decision of this Government to rob the Australian public of $ 1,000m this year. Perhaps tonight it will give a little back and say: ‘We are honouring our promise of 1 977 to give you some tax cuts. ‘ Such is not the case. If the Arabs had not decided to put up the price of their petrol as they have in the last couple of years, I do not know what the deficit would be. It would probably be about $4,000m. The people of Australia would have no hope of having that election promise of a tax cut honoured. They believed that promise and it helped to elect the present government.

I notice that members of the National Country Party have now entered the chamber. I welcome them to the discussion on petrol pricing. I am sure that all the farmers of Australia will be very pleased to hear that they take an active interest in the fact that the petrol prices they have had to pay in order to try to harvest their crops have been doubled in three years. I am sure that they will be delighted to see that two members of the National Country Party have belatedly appeared to represent them. The facts are very simple. This Government has introduced a petrol pricing policy merely as a tax on the motorist. Let the motorists of Australia simply and clearly understand this.

Mr DEPUTY SPEAKER (Dr Jenkins)Order! The honourable member’s time has expired.

Mr ROGER JOHNSTON:
Hotham

– The matters of public importance which the Opposition bring forward, when it brings them up and how it brings them up, never cease to amaze me. This matter is not new, so why bring it up now? Opposition members had the opportunity to raise it during the debate on the last Budget and on other occasions? Presumably they think that there is some mileage to be gained before the bigger audience which has come to see the opening of the Budget Session. I do not know how, as the subject has been so well canvassed previously. One would think that if the matter were so important the Leader of the Opposition (Mr Hayden) would have spoken instead of the last choice in the popularity contest of the Whitlam Government. I notice that only 13 Opposition members are now present, which makes me think that the matter cannot be important to them. Why bring up the matter on the first day of the Budget Session? (Quorum formed). Oil pricing is only one part of the energy policy. The energy policies on which all countries are working- Australia’s energy policy was enunciated on 27 June this year- were brought to a head by the price increases of the Organisation of Petroleum Exporting Countries and the crisis in Iran at the beginning of this year.

Some countries, such as Japan and America, have massive problems for very different reasons. They are working on different approaches to their problems. America has had trouble in making its people understand the extent of its problems. In consequence it is having a great deal of trouble in getting acceptance of legislation to deal with the situation. However, the President and his energy advisers have indicated that Australia’s approach is the answer and agree that America should have world parity pricing for oil. The whole idea of import parity is to allow decisions on energy to be made on the correct basis. It will provide a major incentive to increase oil exploration activity and maximise the development of existing fields. I will talk about that matter later. It will encourage conservation of scarce sources of energy. It will promote the use of available alternative energy sources. It will stimulate the commercial development of major new energy projects in areas such as oil shale- again, I will refer to this later- coal liquefaction and the extenders, ethanol and methanol. These things will come about only if we have a realistic price for petroleum products.

Notwithstanding import parity pricing the price of petrol in Australia is lower than in all other countries except America and Canada. The choice is between paying realistic prices for petroleum products and not having access to adequate supplies. There are no other options. We need oil, not just for making petrol and diesel fuel for cars and trucks but for industry and electricity generation. Without oil many country towns would have no electricity. Many large cities would have power rationing. I think that this is what the Labor Party wants. In spite of the plaintive pleas of the low energy lobby there is no way that we can maintain the standard of living of Australians, much less raise it, unless we use more oil and more energy. This is not to say that we should not try to save oil. We must and we will. But this will be possible only through realistic pricing of oil. It is because of import parity pricing that oil companies are progressing with drilling on the North West Shelf. Without such a pricing policy they would be drilling off Timor, Indonesia or elsewhere to get realistic prices for their product. They would not be drilling on the North West Shelf. This is a reasonable proposition for the oil companies. It is a very reasonable approach by a government to help its balance of payments now and in the future.

It is interesting to note that the Labor Party has put forward no alternative to cover its objectives, even though this matter came up a year or more ago, except to promote a socialist approach. We have not drilled extensively on land areas not considered prime oil bearing prospects. This has been for the reason which I mentioned previously. There are immense quantities of oil shale in the world. We certainly have a good share in Australia. It has been uneconomic to try to gain oil from this shale at the price the oil companies would have obtained for their product. It is not hard to understand why they did not proceed and why the Government has undertaken its energy policy. One must realise that oil wells presently take only 30 per cent to 40 per cent of the total oil from the field. This again is purely an economic decision based on the low oil prices. With the higher oil prices oil companies will now be able to afford to take the extra step of taking more oil from these fields. There are other means of gaining more oil from oil fields but much more research is required. This research will be done only if oil is realistically priced.

We are going through supply problems because of political events overseas. These problems can be solved only by countries in the Organisation for Economic Co-operation and Development and OPEC agreeing on the obvious. It is obvious that each group needs the other and that they should get together to work out the best arrangements with respect to supply and demand. Honourable members may have read about some farmers in the United States of America lobbying for the swapping of a bushel of wheat for a barrel of oil. That is no solution to the problem, but it is the basis of their argument. The Prime Minister (Mr Malcolm Fraser) has a great record in international affairs. I would ask him to use his international status to bring the parties together. I am sure that amicable arrangements would result. The whole point at which the Opposition has directed its raising of this matter of public importance is not the reason for the pricing of petroleum products. Therefore, its whole argument has no relevance. We have shown good reason for setting the world parity price as the price for our oil. It affords many advantages to Australia.

Mr DEPUTY SPEAKER (Dr Jenkins:
SCULLIN, VICTORIA

-The discussion is concluded.

page 33

QUORUM BELLS

Mr DEPUTY SPEAKER (Dr Jenkins:

-I have received a complaint that while the quorum bells were ringing some red lights were flashing instead of green lights. Until that fault can be investigated and corrected, I hope that members will take care when the bells are ringing to ascertain whether they are ringing for this House.

page 33

TARIFF PROPOSALS

Mr FIFE:
Minister for Business and Consumer Affairs · Farrer · LP

– I move:

Customs Tariffproposals Nos 20 to 27

The Customs Tariffproposals I have just tabled relate to proposed alterations to the Customs Tariff Act 1966. Proposals Nos. 20 to 25 formally place before Parliament, as required by law, tariff changes introduced by Gazette notices during the last recess. Proposals No. 20 contains tariff changes effected by the Government’s decision on recommendations made by the Industries Assistance Commission in its report on bags, sacks and certain polyolefin fabrics. The Government has decided not to accept the recommendations of the Industries Assistance Commission that short term assistance for the production of bags, sacks and certain polyolefin fabrics be discontinued from 1 July 1979. Instead, the Government has decided that additional assistance be provided until 3 1 December 1980 but at reduced rates. This decision will be effective in maintaining the ad valorem rate of 35 per cent on bags and sacks and 30 per cent on fabrics from all sources except New Zealand and in reducing the fixed rate portion. Most goods of New Zealand origin will continue to enter duty free. In reaching this decision the Government has been mindful of the Commission’s comment that the industry has made progress towards competitiveness through cost reductions and improved productivity and considers that the industry should be given the opportunity to complete its development programs. The Proposals also contain certain changes of an administrative nature which do not involve changes in duty rates.

Proposals No. 21 arises from the Government’s acceptance of the recommendations of the Industries Assistance Commission in its report on hoists, pulley tackle and winches. The effect of the decision was that the short term assistance, in the form of tariff quotas, accorded to endless chain hand operated pulley tackle and hoists would be discontinued and in its stead an industry rate of 25 per cent would be phased in over a period of 3 years. Imports from New Zealand and Papua New Guinea sources continue at duty free rates whilst goods of developing country origin attract preference margins of up to 20 per cent. The Government had noted the Commission’s comments that, despite relatively high assistance for many of the products, the competitive position of local manufacturers had generally declined. However, in the Commission’s view, phasing down of duties should reduce the likelihood of a sudden disruptive flow of imports and in addition should give local manufacturers adequate time to adjust their activities, including the completion of structural changes currently being undertaken.

Proposals No. 22 reflects the Government’s general acceptance of the recommendations made by the Industries Assistance Commission in its report on travel goods, briefcases, toilet cases and similar goods. The effect of the decision means duties of 45 per cent apply to some of these goods, and will be maintained until 30 June 1980 and then be reduced to 30 per cent. All other goods are provided with assistance in the order of 30 per cent except for a range of products which phase to minimum rates after 30 June 1980. Imports from New Zealand and Papua New Guinea are duty free, whilst a 10 per cent preference margin applies to goods of developing country origin. In accepting the Commission ‘s recommendations the Government noted the Commission’s view that long term assistance over the whole range of local production at the present level or the level requested by the industry would not be justified because of the high cost to the community which this would involve. Also noted was the Commission’s view that continued assistance for rigid cases and brief cases would be justified because their production was less affected by imports and appeared to offer better prospects for long term profitable operation with moderate levels of assistance. As a result of agreements negotiated with New Zealand, the changes contained in Proposals No. 23 include that country in tariff quota restrictions applying to imports of babies napkins. The Proposals impose a $ 1 per square metre penalty duty on goods of New Zealand origin imported outside quota allocations and is operative on and from 1 August 1979.

Proposals No. 24 arises from the Government’s decision to continue the short term duties applying to imports of certain ceramic floor and wall tiles which were due to expire on 4 August 1979. The Government has decided to maintain the current levels of assistance pending a decision on recommendations made by the Industries Assistance Commission in its report on ceramic floor and wall tiles, et cetera. Proposals No 25 reflects the Government’s acceptance of the recommendations made in the Temporary Assistance Authority’s report on continuation of assistance for insulators to continue the imposition of temporary duties, except in respect of fence insulators, until 30 June 1980. Fence insulators no longer attract temporary duties from general or preferential sources and are dutiable at 37.5 per cent and 30 per cent respectively. However, temporary duties continue to apply at a reduced rate to insulators from developing country and New Zealand sources until 30 June 1980. All imports from Papua New Guinea are duty Free.

Proposals No. 26 removes the 12.5 per cent levy which applied to imports of certain chest freezers. The change is necessitated by the Government’s decision to terminate the import licensing restrictions on these goods. This action has been taken following a review of the industry situation in which it was found there was insufficient evidence to justify the continuation of such assistance. Proposals No. 27 implements the Government’s decisions on recommendations made by the Industries Assistance Commission in its reports on chemical products (Part A), (b) confectionary, chocolate and cocoa products, and (c) miscellaneous industrial machinery. The Government’s acceptance of the recommendations contained in the chemical products (Part

  1. report means most of the goods under reference from all sources will be dutiable at minimum rates. Where minimum rates have been decided, the Government had noted the Commission ‘s comments that there was either no evidence of local manufacture or no demonstrable requirement for assistance.

In respect of the assistance accorded the cyclamate industry, it was found that assistance in the past had been high. The proposed duties phasing down from 50 per cent to 20 per cent over the next five years should prevent any undue disruption and the local producer will be given the opportunity to demonstrate its potential viability. Additionally, as only small quantities of artificial sweeteners have attracted excise duties in recent years these duties have been abolished. The duties now applicable to cyclamates are therefore solely protective in nature. Duties of 25 per cent are proposed on fire extinguisher charges, maintaining assistance pending further consideration of the fire extinguisher industry by the Commission. A 20 per cent rate of duty will also apply to gelatin imports. This agrees with the Commission’s views that the manufacture of gelatin should continue to be assisted as it is a relatively low cost export oriented industry.

The decision on the confectionery report means that chocolate, sugar confectionery and biscuits put up as confectionery will generally be dutiable at 20 per cent. The remainder of the goods under reference will attract minimum rates of duty. This report is a result of the Commission’s review program. The Commission’s assessment was that the local industry currently holds over 90 per cent of the market, receives significant natural protection and is expected to increase its market share later in the year when one of the industry’s largest importers commences local manufacture. The effect of the decision in relation to the miscellaneous industrial machinery report means that most goods currently imported at minimum rates will continue to do so. Other goods will be dutiable at an industry rate of 1 5 per cent, except that most goods which are presently attracting duties higher than 15 per cent would retain their duties for a further five years. In respect of the latter goods, the Government noted the Commission’s view that, following tariff reductions in January 1 977, the industry would benefit from a period free from further tariff adjustment.

The Government has generally accepted the Commission’s findings in respect of this report. However, the Commission had recommended that some goods of which there was not local manufacture and which were previously dutiable, should now attract minimum rates. The Government has not generally accepted this recommendation on the basis that the adoption of an industry rate for a range of related products is essential to encourage the efficient allocation of resources between activities and this approach should be extended as far as practicable. The section of this report dealing with injection moulding machines was acted upon separately during the last sitting of Parliament. I have had a comprehensive summary setting out the nature of the duty changes prepared and circulated to honourable members. I commend the proposals to the House.

Excise Tariff Proposals Nos 5 and 6

Excise Tariff Proposals No. 5 (1979) which I have just tabled formally place before Parliament alteration to the Excise Tariff introduced during the winter recess by authority of Gazette Notice No. 1 (1979) under section 160b of the Excise Act. Proposals No. 5 ( 1 979) increases the excise duty on stabilised crude petroleum oil from $70.98 to $102.27 per kilolitre operating on and from 1 July 1979. This alteration followed determination, by the Minister for National Development (Mr Newman), of new import parity prices from 1 July 1979 in accordance with the Government’s decision that all Australianproduced crude oil should be priced to refineries at import parity levels.

Excise TariffProposals No. 6 which I have also tabled is complementary to Customs Tariff Proposals No. 26 and has the effect of abolishing the $4.41 per kilogram excise duty on saccharin and cyclamates. Together, the Customs Tariff Proposals and that Excise Tariff Proposals implement the Industries Assistance Commission’s recommendations on levels of protection and other matters relating to these products. I commend the Proposals.

Debate (on motion by Mr Hurford) adjourned.

page 35

TEMPORARY ASSISTANCE AUTHORITY REPORTS

Mr FIFE:
Minister for Business and Consumer Affairs · Farrer · LP

– Pursuant to section 30b of the Industries Assistance Commission Act 1973 I present the reports of the Temporary Assistance Authority on continuation of assistance for insulators and continuation of assistance for sheets and plates of iron and steel. These reports were distributed to honourable members during the adjournment.

Ordered that the reports be printed.

page 36

INDUSTRIES ASSISTANCE COMMISSION REPORTS

Mr FIFE:
Minister for Business and Consumer Affairs · Farrer · LP

– For the information of the honourable members I present reports of the Industries Assistance Commission on: Certain electric motors- short term assistance; bags, sacks and certain polyolefin fabrics; hoists, pulley tackle and winches; travel goods, brief cases, toilet cases and similar goods; confectionery, chocolate and cocoa products; chemical products, part A; and miscellaneous industrial machinery.

Ordered that the reports be printed.

page 36

TARIFF PROPOSALS

Mr FIFE:
Minister for Business and Consumer Affairs · Farrer · LP

– I ask for leave of the House to move a motion to discharge certain tariff proposals which were moved earlier in the year and which constitute part of Order of the Day No. 37. These proposals were incorporated in the Customs Tariff Amendment Bill 1979, the Excise Tariff Amendment Bill 1979 and the Excise Tariff Amendment Bill (No. 2) 1979 which have now been assented to.

Leave granted.

Motion (by Mr Fife) agreed to:

That the following tariff proposals, constituting part of Order of the Day No. 37, Government Business, be discharged: Customs Tariff Proposals Nos 1 to IS (1979) and Excise Tariffproposals Nos I to 4 ( 1 979).

page 36

SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) AMENDMENT BILL (No. 2) 1979

Second Reading

Debate resumed from 24 May, on motion by Mr MacKellar:

That the Bill be now read a second time.

Mr WILLIS:
Gellibrand

-The Sales Tax (Exemptions and Classifications) Amendment Bill which is now before the House is a minor piece of legislation. This is indicated by the fact that the Minister for Immigration and Ethnic Affairs and Minister Assisting the Treasurer (Mr MacKellar), when introducing it, spoke for only three minutes. Of course, ministerial brevity is not always a good indicator of the minor importance of legislation. I recall that the Commonwealth Employees (Employment Provisions) Bill which was introduced two years ago by the present Minister for Industrial Relations (Mr Street) had an accompanying second reading speech of less than two minutes. That is certainly a highly controversial piece of legislation. In this particular case the Minister’s brevity in the second reading speech was entirely justified.

The Bill seeks to clarify the law relating to sales tax at the top rate of 2Vh per cent so as to remove doubts arising from the development of new products and from the production of various combination products incorporating some items which in isolation would be subject to tax at the rate of 2Vh per cent but which would otherwise attract a lesser rate. The types of items particularly involved in this legislation are radio and television sets, record players and records, record holders, tape recorders and tape players, cassettes and cassette holders and other sound reproduction equipment. The principal purpose of the Bill is to insert a new provision in the Act to the effect that in the case of products that contain components that would in isolation be subject to sales tax at the rate of 27V4 per cent, those products will be subject to the rate of 27!£ per cent if the componency which in isolation is subject to that rate forms more than 50 per cent of the total value of the products concerned.

More simply, in the case of a cocktail cabinet incorporating a television set or some form of sound system, the rate of tax would be determined by the proportion of the value of the cabinet that the television set or sound system comprised. If the television set contained in such an item of furniture comprised over 50 per cent of the total value, the tax payable would be 27.5 per cent. If it was less than 50 per cent, the tax would be that applying to cocktail cabinets alone which is a mere 2.5 per cent.

The effect of this decision will be greatly to differentiate the price of these similar products. For instance, a cocktail cabinet containing a television set with a wholesale price of $1,000 could be priced very differently after tax with just very minor changes. If the television set comprised 49 per cent of the total value of the combined unit, that is, the cocktail cabinet incorporating the television set, the tax would be only $22.50. If the television set was 5 1 per cent of the total value of the combined unit, the tax would be $275. The effect of this extraordinary tax difference in very similar items will therefore presumably be substantially to discourage the production of such combined items where the proportion of total value comprised by a television set or sound system is more than 50 per cent of the value. There will be a very substantial incentive indeed for consumers to purchase such items separately rather than buying pieces of furniture which incorporate such highly taxed products.

Despite the somewhat anomalous situation which may arise, the Opposition recognises the need for some arbitrary decision to be made as to the point at which the 27.5 per cent shall apply to such items, Given that reality, the level of 50 per cent does not seem unreasonable. The Opposition therefore does not oppose the Bill. However, it should be noted that one way of reducing the degree of potential anomaly would be to reduce the upper rates of sales tax. There are, in fact, good macro-economic reasons for doing that at the present time. It would reduce prices and so be anti-inflationary and would also stimulate demand for consumer products. Given this present state of consumer confidence, this would not be a bad thing. However, I have no confidence whatever in the likelihood of such a common-sense announcement being made in the Budget which will be brought down tonight.

Mr GRAHAM:
North Sydney

-The Sales Tax (Exemptions and Classifications) Amendment Bill (No. 2) of 1979 will be supported by the Opposition so I hope that I can make these comments about this legislation in what might be described as a non-party political atmosphere. The Bill relates to television receiving sets, radio receiving sets and items of what is known as sound equipment such as record players and tape players. These provisions apply also to records and tape recordings, parts and accessories for sound equipment. The high rate of 27.5 per cent is now payable on television sets, radio sets, record players, tape recorders, tape players and the combinations of these items as defined in the second schedule to the Sales Tax (Exemptions and Classifications) Act. The amount of 27.5 per cent is now payable on records, tape recordings of music or verbal entertainment material as well as component parts, accessories and other specified classes of goods which are used in association with television, radio and sound equipment.

From time to time, manufacturers at home and overseas do try to outwit the Commissioner of Taxation who is charged with the unenviable task of collecting the taxes decided upon by the Parliament. From time to time, advances in science and technology lead to a smoke screen of semantics called ‘new terminology’. This environment has led to doubts about the proper and valid application of the 27.5 per cent rate particularly to television, radio and sound appliances. This amending legislation will clarify the position and remove any doubts about the legal validity of the Commissioner’s decision.

The amount of 27.5 per cent will be payable on virtually every item of equipment used in the reception of TV or radio programs, the reproduction of sound or noise- as I think it might be fairly described from time to time- from records, tapes or wires or for any two or more of these functions. It is interesting to note that although clocks with radios built into them are included for the benefit of the amateur radio fraternity, radio transmitter/ receivers will be taxed at the rate of 15 per cent. Particular sections of the amending legislation deal with television, radio or sound equipment which has other uses or functions.

The Minister gave as an example an article of furniture which has a section of it designed to hold glassware and which also includes built-in record and cassette player equipment. Such an article of furniture would be taxable at 27.5 per cent if the value of the record and cassette player components together made up more than half the value of the whole article of furniture. The 27.5 per cent sales tax on records, tape recordings, parts and accessories for television, radio and sound equipment will also apply to envelopes, stands, cabinets and other facilities for the storage of records and also to cassette racks, holders and other storage facilities for tape recordings.

The Industries Assistance Commission report of 15 February 1978 deals with the music recording industry in Australia and contains the requests from interested parties about sales tax on recordings and music. On pages 43 and 44 the report stated:

The Commission received a number of requests relating to sales tax on music recordings. The main requests were: exemption from sales tax for promotional copies of Australian records; exemption from, rebate of, or reduction in rate of sales tax for all Australian records; and that sound recordings be regarded as a cultural medium for the purposes of Annex C of the Agreement on the Importation of Educational, Scientific and Cultural Materials (the Florence Agreement)-

Consequently it was requested of the Industries Assistance Commission that it should recommend an exemption from sales tax. The report continued:

The Commissioner of Taxation - always very keen to keep an eye on the Consolidated Revenue- advised the Commission that under the provisions of the Sales Tax (Exemptions and Classifications) Act goods that are given away for promotional purposes by a manufacturer or distributor are subject to tax on the grounds that they have been applied by the manufacturer or distributor to his own use, i.e., that he has used them for the purposes of his business by giving them away for promotional purposes. An exemption for promotional copies of recordings would be difficult to justify while tax remained payable on other classes of promotional goods used or given away for business purposes in other areas of industry. The taxing of goods applied to their own use by the manufacturers and distributors of those products is also designed to preserve equity by placing them in the same position as retailers and others who must purchase any goods they require for business purposes and bear tax when purchasing them.

The first two requests referred to . . . involve differential sales tax treatment between the Australian and imported product. The Commissioner of Taxation has advised . . .

That advice was given to the Industries Assistance Commission-

  1. . that such differential treatment would be contrary to Australia’s commitments under the General Agreement on Tariffs and Trade.

In relation to the third request . . .

This relates to the Florence agreement to which I have referred- the Commissioner of Taxation has advised that Australia is not a party to the Florence Agreement. But even if it were, the agreement would not prevent the imposition of sales tax on recordings; it merely forbids the imposition of tax on the imported product in excess of that on the domestic product.

Therefore in these circumstances the Industries Assistance Commission decided that there was little justification for recommending any change in the present sales tax provisions for music recordings. References have been made in this House to direct taxation and its significance in the economy, and also to the attitude of the various political parties from time to time in relation to the problem of differentiation between direct taxation and indirect taxation in its various forms. I believe that the whole of the sales tax process should be reviewed because its impact upon the national economy is important and significant. I am prone to believe that direct taxation is less harmful than indirect taxation in the context of the progress and development of the national economy.

In spite of what honourable members on both sides of the House have said, I would like to quote from the basic statistics that are submitted to the Parliament by the Organisation for Economic Co-operation and Development in its economic survey which, as is well known, is carried out over a number of years. For example, I note that the report of July 1975 relating to the fiscal year 1973-74 referred to a gross domestic product of $50,433m and the current revenue was 28.9 per cent of the GDP. I think that this was when Mr Crean was the Treasurer. The OECD said that direct taxes at that stage represented 14.9 per cent of the 28.9 per cent. If one turns to the report of 1978 covering 1976-77, one finds an enormous increase in the GDP to $8 1 ,560m; current revenue as a public sector percentage of the

GDP being 3 1.8 per cent and direct taxes having risen to 18 per cent. Last year, with a gross domestic product of $90,68 lm, the current revenue percentage was 31.3 per cent and direct taxes were 17.8 percent.

I mentioned those figures because I suspect that from time to time the House is given an impression about the relationship between the total taxation take by governments in Australia and the gross domestic product which is prone to be a political interpretation. I feel that in those circumstances the House ought to be reminded that with a little study it can be shown that there has been not a great deal of variation over quite a long period, irrespective of the government in power. I complete my remarks by saying that in terms of the total sales tax concept I believe that the figures are unnecessarily high. I am aware of the fact that Consolidated Revenue must be collected from some source and that the Parliament instructs the Commissioner of Taxation to collect all of the Consolidated Revenue that he possibly can. Notwithstanding that, I think that indirect taxation generally has an adverse effect upon production in the community. In my judgment this effect would be worthy of exploration as one of our very great problems at the present time is the problem of producing employment for young people in the next decades of our national development. I conclude on that point. I will support the Bill and I am aware of the fact that my friends on the other side of the House will also support the legislation.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr John McLeay) read a third time.

page 38

COAL INDUSTRY AMENDMENT BILL 1979

Second Reading

Debate resumed from 3 1 May, on motion by Mr Street:

That the Bill be now read a second time.

Mr YOUNG:
Port Adelaide

-The Coal Industry Amendment Bill 1979 is a formal piece of legislation which formalises that agreement reached between the New South Wales Government and the Commonwealth Government whereby the person who constitutes the Coal Industry Tribunal dealing with the coal industry of New South Wales and Queensland is able to be seconded to either the Australian Conciliation and Arbitration Commission or to the Industrial Commission of New South Wales. The Opposition does not contemplate that that would happen frequently, but there should be no objection to that person being seconded to either of those tribunals should his position in the coal industry be such that he is not required in it. This was the practice with Mr Gallagher, the person previously constituting the Tribunal, but at that time the legislation named him and this did not allow for a flow-on to other people who would hold the position. This amending Bill does. Complementary legislation will be passed in New South Wales. This Bill has the support of the Opposition.

Mr WEST:
Cunningham

– I would like to use the debate on the Coal Industry Amendment Bill 1979 to make a plea to the Government that when it brings down the Budget tonight it remove the discriminatory $3.50 per tonne levy on the export of coal and replace it with the policy of the Australian Labor Party which calls for the replacement of flat levies on tonnages with a resources tax based on profitability of companies. To show just how justified I am in raising this matter I refer to the case of Bellambi Coal, a subsidiary of Allied Gold Fields. At the end of the last financial year it turned in a pre-tax loss of $2.9m and then had to pay a $4.5m levy on coal produced. I ask the House to compare that situation with that of the Utah Development Corporation which, after paying some $80m-odd in coal export levy, still turned in a profit of $ 130m at the end of the last financial year. There can be no doubt that the coal export levy as a flat levy on tonnage rather than a tax on profits discriminates against marginal mines, particularly the smaller underground producers in New South Wales vis-a-vis the larger open cut mines in Queensland in the Bowen basin which have a tremendous advantage in having rail transport to the ports of Queensland, and, of course, being much closer to Japan.

I make an appeal to this Government to remove the coal export levy tonight and replace it with a resources tax on profitability. If $350 per tonne levy remains, at least $2 per tonne ought to be returned to State governments, such as the New South Wales Government, to pay for transport infrastructure to the much needed new ports. We cannot allow a continuation of a situation in which we export larger amounts of coal and build ports to expedite its sea transportation, but do nothing very much to expedite its land transportation. While the levy remains, clearly a proper percentage of that levy ought to be returned to the appropriate State government for transport purposes.

However, the last point I make is that the levy clearly ought to come off and be replaced by a resources tax. Such a resources tax, pitched at the right threshold level of profitability to investment, would most certainly miss most of the smaller mines in New South Wales and thus would allow the New South Wales Government to impose levies less than the present $3.50 per tonne- say, $1 to $2 per tonne- to pay for the ports, the railroads and the conveyor systems that are so necessary in order to get our coal into the ships.

Mr Young:

– Would it help industrial relations?

Mr WEST:

-I think that it would help industrial relations enormously. There is no question about it. If this situation continues much longerwith the Bellambi mine, about which I have just spoken, making a $2. 9m loss after paying $4.5m to the Federal Government as a coal levy, none of which is returned to the State government for infrastructure purposes- we will not have to worry about industrial relations in regard to employing people, because obviously the mine will not continue to operate.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Street) read a third time.

page 39

NATIONAL LABOUR CONSULTATIVE COUNCIL AMENDMENT BILL 1979

Second Reading

Debate resumed from 3 1 May, on motion by Mr Street:

That the Bill be now read a second time.

Mr YOUNG:
Port Adelaide

-Whilst the Opposition does not oppose the amendment brought in by the Government, we have some things to say about it. The amendment deals with the fact that since late last year the Department of Employment and Industrial Relations has been split. This is a matter to which we on this side of the House object. As soon as the people of Australia re-elect a Labor government, that will become one department. I must say that the only reason why the Department of Employment and Industrial Relations was split, which is apparent to honourable members on this side of the

House, is that the then Minister for Employment and Industrial Relations, Mr Street, in making a statement to the House in September of last year, for the first time gave the people of Australia some idea of the crisis of unemployment with which we were living and some idea of the great difficulties of unemployment with which we were going to be confronted in the next five to 10 years. It seems to us that the truth in the statement made by Mr Street last September was too much for the Government. It is not something of which the Prime Minister (Mr Malcolm Fraser) is- terribly fond. Later we found that a new Department of Employment and Youth Affairs was established, separate from the Department of Industrial Relations. There was no necessity or justification for this. Obviously a Labor government will reunite the two departments.

In addition to that, we give recognition to the enormously important role played by the National Labour Consultative Council. In dealing with industrial relations in this country there are perhaps few bodies that play a more important role in trying to unravel the difficulties that arise between employees, employers and government. In no other body in this country do more superior people from each of those bodies discuss the matters that come before them. We give recognition to the importance of this mechanism. I must say to the Government that it is a fool ‘s errand to send any Minister, whether it be the Minister for Industrial Relations, the Minister for Employment and Youth Affairs or the Minister for Productivity, into a forum such as the NLCC and expect that the people representing organised labour in this country will compromise their position as the representatives of organised labour by buying some of the crazy ideas put forward by this Government for settling industrial disputes. One need only point to the Commonwealth Employees (Employment Provisions) Act or the Commonwealth Employees (Redeployment and Retirement) Act in order to show where the Government has created a vacuum in dealing with its own employees as far as industrial relations are concerned.

When these matters were before the Parliament, speaker after speaker from the Government side said that these measures were welcomed by public servants and that these measures were looked upon as being favourable to the Public Service. The whole emphasis of the Commonwealth Employees (Redeployment and Retirement) Bill was given over to optional early retirement at 55 years of age and not to the early forced sacking of any public servant in this country. We warned the Government thenduring the recess that we have just been through we have been proved so right- that the Public Service overwhelmingly is not prepared to accept those measures. That could have been sorted out in the NLCC. It is my opinion that, left to his own devices, the Minister would have sorted out those measures in the NLCC; but there is another demon at work in this Government, namely, the Prime Minister (Mr Malcolm Fraser). He has to have a confrontation with the trade union movement. In his last national broadcast, which we were urged to witness on national television, he told us that all the problems of this country belonged to and rested on the shoulders of the trade union movement.

In all the problems that this country faces he finds as his only foe the trade union movement. So we have legislation such as that to which I have referred in order to harass and provoke the public servants and perhaps to politicise the Public Service of this country. That type of legislation will not work. Had the Minister for Industrial Relations and the Treasurer (Mr Howard)- if the Treasurer had had the time- gone to the NLCC to discuss what ought to be the wages policy in this country, they would have known that they were wasting their time in going to the conference on wage indexation to put forward the foolhardy idea of automatic indexation adjustments with discounting of all government charges. There are two features of this to which I wish to refer. One is that the Government has already made decisions which are now costing every person in Australia a great deal of his income. These are the decisions on petrol prices and the health insurance scheme which is about to commence. These are not charges which wage and salary earners can ignore. They are not amounts of money making up a part of the standard of living which the working people of this country are prepared to sacrifice.

Mr Street:

– I take a point of order, Mr Deputy Speaker. I draw to the attention of the Chair the provisions of the Bill we are debating. It provides merely for the representation of the Minister for Employment and Youth Affairs and the permanent head of his Department on the National Labour Consultative Council. My point of order is that the honourable member for Port Adelaide is not speaking to the provisions of the legislation.

Mr Young:

– Speaking to the point of order, Mr Deputy Speaker: I am referring exclusively to the role of the NLCC, and that is what the Bill refers to.

Mr DEPUTY SPEAKER (Mr Drummond:
FORREST, WESTERN AUSTRALIA

Whilst the amendments to the Act are only of the nature that the Minister has described, I think that a more broad ranging discussion should be allowed.

Mr YOUNG:

– We have already seen an enormous increase occur in the cost of petrol. Every consumer, every wage earner who uses his own vehicle or public transport, now knows the impact that the Government’s decision to meet world parity pricing on crude oil is having on his pay packet.

Mr Street:

– I raise a point of order, Mr Deputy Speaker. I take your point in relation to the ambit of the National Labour Consultative Council Act, but I suggest that it does not refer to petrol prices.

Mr DEPUTY SPEAKER:

-I uphold the point of order in this instance and remind the honourable member for Port Adelaide that the Chair and the Minister were generous in their interpretation of the Standing Orders relating to this matter. I ask him to confine his remarks to the matter under discussion.

Mr YOUNG:

-I will not talk about petrol. If someone said to a person earning $150 a week that he would be charged an extra $6 a week to travel to work- this situation has arisen in the last 18 months as a result of government decisions- would he expect that wage earner to accept a package that did not take that aspect into account? My view is that if these matters had been thrashed out by the NLCC- where they should have been thrashed out- a proposition as stupid as the proposition that was put to the indexation committee last week would never have been put forward by the Government. The other point to be made about such an offer is that this Government has told the working people of Australia so many lies that no one is prepared to believe anything it says. This is the other vulnerable aspect of the offer about which the representatives of organised labour are concerned when they go to meetings of the NLCC. These matters ought to be discussed. Greater emphasis should be placed on the role of the NLCC in determining these questions. If any of the matters to which I have referred had been discussed or thrashed out at meetings of the Council, the Government as one of the partners- even the senior partnerwould have known that it would be futile to put forward provisions such as those contained in the legislation affecting its employees or the propositions it has put forward on how to solve the wages problem in this country.

People outside the NLCC and perhaps the Department of Industrial Relations and the Department of Employment and Youth Affairs are not privy to the decisions and discussions of the Council. These are confidential. So I do not know whether wages have been discussed by the NLCC. But it seems to me to be ironic that for almost a year the Government has been without a policy on wages. I believe that in eight of the last 12 national wage case hearings the Government has gone before the Conciliation and Arbitration Commission and asked that no wage increase be granted. These are matters that ought to be discussed by the NLCC. This situation will not be helped- I refer to the amending legislation before us- by the Minister for Employment and Youth Affairs being at the Council’s meetings. If ever there has been an example of His Master’s Voice sitting on the front bench of the Government is has been the Minister for Employment and Youth Affairs when he has been representing the views of the Prime Minister. Whatever the Prime Minister wants the Minister for Employment and Youth Affairs to say he will say it. So his presence at meetings of the NLCC will not add anything to them.

I think that the Minister for Industrial Relations (Mr Street) understands more than anybody else the importance of the Council, not only in relation to what it should discuss but also in relation to maintaining and consolidating its role. Some action has been taken by the Government and perhaps the unions have over-reacted to it in playing their role on the NLCC. The Opposition sees the NLCC as being enormously important. We want to see it continue to play the role that it has and perhaps to enlarge its role in industrial relations. At the moment people all over this country are sitting down and talking about the problems between employers, employees and the Government. Why are we having so many problems in industrial relations?

Members of the Opposition who serve in this field are being invited every day to speak to groups about industrial relations. What is the problem that cannot be solved? A mechanism like the NLCC ought to be given the respect that it deserves. When Mr Hawke, Mr Polites and people like that meet with the Minister, such a meeting should be given great respect. They .°re the people who should be able to solve some of the problems. I believe that the Government ought to give them more rein in dealing with the problems that come before them. Perhaps consultation will overcome many of the problems. They will not be overcome by the provocation which has been so much a part of industrial relations in the past couple of years.

Mr BURR:
Wilmot

– I join the honourable member for Port Adelaide (Mr Young) in supporting the Government for the introduction of this measure. I think that any layman would agree that it is sheer common sense that the Minister for Employment and Youth Affairs should also sit on the National Labour Consultative Council. The Minister assists the Minister for Industrial Relations in those matters and I think that he should be fully informed and be able to participate in NLCC discussions. The Minister for Industrial Relations (Mr Street) should be congratulated by honourable members on both sides of the House for his foresight in establishing the National Labour Consultative Council. I think that the Minister showed statesmanship in bringing around a table representatives of unions, employers and the Government. Whilst they may not agree on particular issues, at least they are given the opportunity to sit down in a forum and discuss those matters. I congratulate the Minister for introducing this measure in the first instance and also for allowing the Minister for Employment and Youth Affairs to take part in these discussions.

I think that it needs to be recognised by people on both sides of the House that if the NLCC is to work as we hope it will work- that is, in the manner on which the honourable member for Port Adelaide commented; I am sure it has his approval- there must be a common consensus among the people around the table to make it work. Any forum, no matter what it is, will produce results and have an effect only if there is a desire from all people around the table to make a particular measure work. It is unfortunate that in the short history of the Council there has been evidence of its being used as a political forum instead of as a forum for consensus. I was very disturbed at the decision of the Australian Council of Trade Unions and the Council of Australian Government Employee Organisations not to participate in meetings of the NLCC because of the proclaiming of the Commonwealth Employees (Employment Provisions) Act. It is unfortunate that the trade union movement took that stance because, whilst it may have objections to that provision or other provisions that may be introduced by the Government or by employers, the Council is a body which enables people to sit around a table and discuss matters of importance. There can be consultation without confrontation. Above all else I think that the people of

Australia are looking for consultation and not confrontation.

If some of the bodies that are appointed to that Council adopt the attitude that it can be used as a political plaything then it will not have the desired effect which the Minister has hoped for and on which the honourable member for Port Adelaide has commented. I think that it needs to be taken into account by those who are appointed to the NLCC, the employers, the unions and the Government that there should be a common desire to go into that forum and talk about problems and to make it work. I think that it is fair to say that the reaction at the moment to industrial relations matters is probably the cause of the most widespread concern amongst the people of Australia.

In 1975 and 1977 the Government brought forward policies to help overcome the industrial relations problems that were in existence at that time. The policy to establish the National Labour Consultative Council was one of those measures brought forward by the Government. But still there is widespread industrial disruption in this country. As the honourable member for Port Adelaide correctly pointed out, people around this country are asking why there is so much industrial disruption and why there is confrontation among employers, unions and government. Why should there be this confrontation when clearly its effect is to dampen economic prosperity and in fact to retard the job opportunities that might be created for people who unfortunately are out of work at this stage. The effect of current industrial relations defies all common logic. It does nothing to help those people who are in work at the moment and seeking to improve their wages and conditions. It does nothing to help young people and other people who unfortunately do not have jobs. It does nothing to improve the economic prosperity of Australia or to provide for the future of this country. But still there is widespread industrial disruption and there does not appear to be any reason to assume that industrial confrontation is abating.

We all need to ask the question: Why is this happening? Mr Deputy Speaker, I put the view to you that better direction needs to be given by the leaders of this country- by the leaders of trade unions, industry and government. Rather than have a situation in which the leaders are put into a position in which they are expected to be gladiators about to take each other on and to pound each other into the ground, there should be a situation in which the leaders of the various industrial and government groups can sit together and talk about common problems about which all of us are concerned, regardless of our political persuasion. I hope that the leaders will then come up with some sort of consensus that will provide a mechanism for improvements in the future. But that is not happening. The leaders in the country- regardless of whether they are in unions, industry or government- tend to take the view that for the sake of political expediency or individual monetary gain they should adopt a role in which they are gladiators and try to hammer each other into the ground. That attitude causes people in the community to lose confidence in the system, in the leaders, in the governments, in the parliaments, in the trade unions and in the industries in which they work.

This is not good. It is not helping people to plan or causing them to expect that there will be prosperity in the future. I believe that if we are to regenerate the sort of confidence that we think the community should have, and which it has a right to expect, the lead has to be given by those people in the community who choose to call themselves leaders. I must admit that I was impressed by some of the statements that Mr Hawke made during the parliamentary recess. He said that there should be consultation rather than confrontation. I agree with that and I think that all of us on both sides of the House would agree with that approach by Mr Hawke. But it is no good for him to say: ‘Yes, there should be consultation’ in one breath and then in the next breath to support a motion that the Australian Council of Trade Unions and the Council of Australian Government Employee Organisations not participate in NLCC discussions. One attitude is completely contradictory to the other. Sure, the statements are good but they have to be backed up by practice. I do not necessarily single out Mr Hawke. The same situation applies to the leaders in trade unions, employers’ groups and government. There should be consultation that gives a lead at that level to people in the community so that they can plan and be confident that decisions coming from unions, industry or government can be respected and followed by the community at large.

The NLCC, which was set up by the Minister for Industrial Relations, was the body that I had hoped would provide a forum for that process to take place. It was a forum set up for the senior people of industry, trade unions and government to sit round a table to talk. But if that body is to work in the way that I had hoped it would- I believe that people on both sides of the House and certainly in the community hoped it would work in this way- there must be a desire on the part of all the people sitting around that table to make it work. If there is the suggestion by any of the individuals or groups around that table that they have some mysterious right to be able to use the Council as a political forum or as part of their weaponry in the battle against an opposing group it will not work. If people take that attitude, regardless of what body or group they represent, around that table at the NLCC then they should be condemned roundly by the community at large. Those individuals who adopt that attitude rightly deserve to be condemned. Certainly I will not be backward in tipping a bucket over anyone who might adopt that attitude.

The NLCC is a forum that should be looked to by the community as one in which consultation can take place and in which the confrontation in the industrial arena can be broken down. I support the honourable member for Port Adelaide in saying that it is a body that should be given much greater recognition by the Government, unions, employers and the community at large because it is a body in which that sort of consultation can take place. I support the Bill. I know that it is a machinery Bill allowing the Minister for Employment and Youth Affairs to be a member of that body. Anything that can be done by the Ministers who attend the meetings of the Council, by leaders in the trade union movement and in industry and by employer groups who can come together around a table at that forum should be done. They should not only come together with the idea of having a nice little chitty chat and a beer afterwards but also they should come together with a view to coming to statesmanlike decisions that can be expressed to the community at large so that from that forum a lead can be given to the community so that it can have confidence that the leaders in the various groups are at least trying their best to arrive at decisions or at a consensus for the betterment of this country, not reaching agreements that will benefit some group or individual just for the sake of political expediency.

Mr Keith Johnson:
BURKE, VICTORIA · ALP

– It is always interesting to hear the honourable member for Wilmot (Mr Burr) address this chamber on matters of industrial relations and this afternoon was no exception. Regardless of all his fine oratory to this chamber it is a shame that his political clout within his own party is so insignificant that he is unable to persuade his political boss, the Prime Minister of Australia (Mr Malcolm Fraser), that what he was saying had some merit. I want to initially correct a misapprehension that the honourable member labours under; that is, that the honourable member for Port Adelaide (Mr Young) supports the legislation. Nothing is further from the truth. Neither the honourable member for Port Adelaide nor the Australian Labor Party supports the legislation. The attitude that is adopted by the honourable gentleman for Port Adelaide and by the Labor Party is that we do not oppose the legislation. We do not support it for the very good reason that we do not support the splitting into two portfolios of a Ministry so important as that which dealt with matters relating to industrial relations in this country. The Government did this in December 1978. We do not support that at all. We have made that clear. If we do not support that we cannot support this legislation because it simply broadens the National Labour Consultative Council. I would like to know the name of the person who perpetrated that little trick of including the word ‘Labour’ in the title. The purpose of the legislation before us is to embrace on the Council the new Ministry that was created in 1978. If we of the Opposition opposed the creation of the new Ministry we must of necessity not favour this Bill. So we do not oppose it because we know that it is part of the machinery, but we do not support it.

I was interested to hear the honourable member for Wilmot speaking about there being consultation and not confrontation. Of course, that is the whole attitude of the Labor Party in all of its industrial attitudes and in its attitudes towards the trade union movement. It has always been one of consultation and not confrontation. It is a pity that the Prime Minister of this country did not take some note of that attitude during the recent Telecom dispute when he gave strict instructions to Telecom that it was not to negotiate with the Australian Telecommunications Employees Association-with the union it was not to negotiate. If what the honourable member for Wilmot is telling us is true- and I believe that it is- that is, that negotiation will obviate industrial disputes rather than confrontation, it is a pity that his own Prime Minister did not embrace the same creed. We would have fewer industrial disputes in Australia if there were consultation rather than the continued confrontation as is practised by at least two Premiers- in Western Australia and Queensland.

I have just recently returned from Japan and from speaking with industrialists in that country it would seem to me that this neat little ploy of stirring up industrial strife that the Government has got going for it to divert the attention of the community away from the Government’s own inadequacies is starting to backfire on it. It might be all very well for domestic consumption, as the honourable member for Wilmot put it to us, that the Labor Party is associated with the unions and therefore the Labor Party must be held responsible for the industrial disputes that exist. That is a nice little stratagem, a nice little ploy, and it is probably working. I do not deny that it is probably working. But the end result of that is that in every news bulletin that one reads in overseas newspapers and reports, industrial disputes in Australia are highlighted. That in turn is being used as a weapon by those who wish to exploit the natural resources of this country, including its people for their own benefit. The Government has been very successful in this area too. It is the Government which foments industrial disputes in this country because the unions have nothing to gain out of industrial disputes. It is not a very great pleasure to go home to one’s wife after being on strike for a week with no pay in one’s pocket. I can say from experience that that is the case.

The unions have no vested interest in creating industrial disputes. It is the present Government and governments of that colour throughout Australia that have a very real interest in creating industrial disputes. They are the traitors to Australia. The traitors in Australia are those governments which foment industrial disputes. The governments of Australia which bring down provocative legislation well knowing that it will create a dispute are the traitors. Those governments of Australia, amongst the eight of them, that take provocative actions, that encourage employers not to negotiate but to confront, are the traitors because they are doing Australia irreparable damage overseas. They like to turn their wrath upon the unions and place everything at the heels of the trade union movement. As I pointed out, that is done purely for domestic consumption.

The whole idea of a consultative council has a great deal of merit. But it must be attended by people of goodwill, as the honourable member for Wilmot pointed out to the House. He said that originally the legislation had been brought about in order to reduce the number of disputes in Australia. Among other things he said that that was one of the purposes of its existence. But in the next breath, after he had patted the Government on the back for taking some action to reduce the number of industrial disputes, he pointed out that the industrial situation had worsened since the Government had been in office, and I think everybody in Australia knows that to be a truism. Whilst the Government, through its private members in this place, would like to put the point of view to the public that it stands above all this, I put the contrary point of view. I would point the finger directly at the Government as being the instigator of industrial unrest in this country. It is well known that the Minister for Industrial Relations (Mr Street), who is sitting at the table, curiously enough does not seem to do very much in industrial relations. It seems to be his colleague, the Minister for Employment and Youth Affairs (Mr Viner), who has a lot to say about trade unions. I freely admit that I have a lot of time for the Minister for Industrial Relations. I believe him to be honest and I believe him to take a keen interest in the subject that he has specialised in over the last few years.

Mr BARRY JONES:
LALOR, VICTORIA · ALP

– You have answered your own question.

Mr Keith Johnson:
BURKE, VICTORIA · ALP

-As the honourable member for Lalor said, I have answered my own question. I know why the Department was divided. I think everybody in Australia knows and I think the Minister for Industrial Relations knows. The reason is that he is too honest. He was looking at the problems and endeavouring to understand them. He would not take action that he considered to be ungentlemanly in order to stir up industrial disputes in this country for political advantage and domestic consumption.

Mr BARRY JONES:
LALOR, VICTORIA · ALP

– He is not a confrontationist.

Mr Keith Johnson:
BURKE, VICTORIA · ALP

-He is not a confrontationist. He is a man who looks at problems and endeavours to understand them. It is for that very good reason that he was moved sideways. He is an old school chum of the Prime Minister, so he could hardly cop the axe. The Prime Minister handled that one very neatly by dividing the Department and shuffling the honest Minister off to one side. He introduced another Minister and I am not implying in any way that he is dishonest, but the man does have a reputation for confrontation as he had in his previous portfolio and as he has demonstrated to us quite clearly in his handling of his present portfolio. It is while there are people like that associated with the NLCC, while there are sitting around that table Government representatives who are bent on confrontation, not consultation, that the spirit of the legislation will not work. It is hardly to be wondered at that the trade union movement is not going to be snowed and it is hardly to be wondered at that the trade unions did refuse to sit around the table while the Government was in such an intransigent mood.

It would do this House and the nation good if there were a full-scale debate on the whole subject of industrial disputes because they are not doing anybody any good, and everybody admits that. But the difference between the Government and the Opposition is that the Opposition has a clear endeavour and an honest approach to the subject and would confront such situations with a spirit of bringing about conciliation between all of the parties rather than driving them into arbitration as is the attitude of the present Government. While that situation exists, while that attitude prevails within the Government, there will continue to be industrial disputes in this country which will benefit nobody.

There is no quarrel with the principle of the legislation, as I pointed out, provided that it is administered by people of goodwill. There is no opposition in the Labor Party to the Bill now before the House which seeks to include the new Minister on the Council. Our opposition is to the claim that there is a need for that Minister. We do not believe that there is. We believe that the addition has been made for a particular purpose and we believe that the eight months that have passed since December 1978 have indicated that purpose quite clearly. The Prime Minister seems to have a predilection for appointing Ministers for everything. He did that with the honourable member for Curtin (Mr Garland) by making him the Minister for all sorts of things- rag bags- in Europe and that, Mr Deputy Speaker, believe you me, is a matter of derision amongst our overseas trading partners located in the Asian region- in the Pacific Ocean, not on the European continent. As that is a matter of derision amongst our overseas trading partners, so too is this whole question of the appointment of a Minister to deal with these matters. There are no real reasons for it. It is a window dressing exercise. One could go right through the Community Youth Support Scheme, right through the whole bit, to show that it is window dressing. There has been absolutely no achievement by the Minister responsible for its administration. I leave it on that note, that the Labor Party does not oppose the legislation but it certainly does not support it.

Mr STREET:
Minister for Industrial Relations · Corangamite · LP

– in reply- In the few minutes before the sitting is suspended for dinner I would like to make a couple of points. I thank those honourable members who have taken part in the debate. The honourable member for Port Adelaide (Mr Young) spent a good deal of his speech talking about issues which I think were not strictly relevant to the Bill but as you allowed him a fair amount of latitude, Mr Deputy Speaker, I hope that you will allow me the same indulgence in replying to one point in particular that he raised. It related to Public Service legislation, the Commonwealth Employees (Redeployment and Retirement) Act. The honourable member referred to provisions which, in his terminology, allowed management to sack people and the undesirable effects that could flow from that. I would like to point out that Public Service legislation has given management that power for a great many years now. The new Act provides appeal machinery which is not available under the present legislation.

The honourable gentleman also referred to wages policy. I was interested to note that now the Australian Labor Party formally opposes the Government’s wages package. I believe that this was a test of the Opposition ‘s sincerity in relation to recent statements that we have heard from the Leader of the Opposition (Mr Hayden) and other ALP spokesmen on the need for a sensible wages policy. But what we have heard today makes it quite apparent that those statements were mere window dressing. The Labor Party is not really interested in a constructive approach to what is one of our major economic issues.

Mr Baillieu:

– Bob Hawke snowed them. That is what happened.

Mr STREET:

-That is quite right. The honourable member for Port Adelaide referred to the importance of the National Labour Consultative Council, as did my colleague, the honourable member for Wilmot (Mr Burr), and I thank him for the remarks he made on the establishment of the NLCC. As the honourable member for Wilmot rightly pointed out, if the Council is to play its full role, the members of it need to attend to put their point of view. I personally greatly regret the decision of the union movement not to participate in the last meeting of the NLCC. I hope that this absence is a temporary one. In the meantime, there is not much point in the Opposition or the union movement talking about lack of consultation when they have decided not to attend the very body, the National Labour Consultative Council, established for that very purpose.

Finally, I turn to the comments of the honourable member for Burke (Mr Keith Johnson). Listening to the honourable member for Burke, one might be forgiven for thinking that the union movement as a whole had nothing at all to do with any form of industrial disruption. I will leave it to the honourable member for Burke to try to sell that idea to the Australian public. The honourable member also alleged that the Government had instigated industrial disruption in this country. For the benefit of the honourable member for Burke and of the House I would like to cite some fairly simple statistics. They are these: During the three years of the Labor Government an average of 4. 1 million man days per year were lost through industrial disruption. During the full three completed years of this Government, the average figure was 1.8 million man days lost if the one day aberration of the Medibank strike is excluded and just over 2 million man days lost if the Medibank strike is included. But, in either case, the number of man days lost per year under this Government is less than half the number lost under the Labor Government. Really, this makes nonsense of the arguments advanced by the honourable member for Burke.

I believe that the Bill before the House will improve the National Labour Consultative Council. It will give it a broader base. I believe that as both sides of the House support the concept of the Council this Bill will result in that body being able to do its job better.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Street) read a third time.

Sitting suspended from 6 to 8 p.m.

page 46

APPROPRIATION BILL (No. 1) 1979-80

Message from the Governor-General recommending appropriation for proposed expenditure announced.

Bill presented by Mr Howard, and read a first time.

Second Reading (Budget Speech)

Mr HOWARD:
Treasurer · Bennelong · LP

-I move:

In doing so, I present the Budget for 1979-80.

The purpose of a Budget Speech is not only to give details of a Government’s revenue and expenditure plans for the year.

It is also an occasion to take stock, to review the course of the economy over the previous year, to assess prospects and problems for the year ahead and above all to restate the basic economic policies of the Government.

One persistent theme has dominated this Government’s conduct of economic policy since its election in 1975.

That has been the uncompromising nature of its attack upon inflation as the fundamental and most enduring cause of the economic difficulties of the 1970s.

Tonight I reaffirm the determination of this Government to maintain that attack.

In recent months, due largely to world wide price increases, inflationary pressures have intensified in Australia.

The prime purpose, therefore, of this Budget is to respond decisively to these renewed pressures.

In doing so we should not lose sight of the real gains that have been made. Despite the recent upward movement in inflation, it is still very much lower than it was several years ago.

It should not be forgotten that inflation was as high as 17 per cent in the year to June 1975 and stood at 14 per cent when this Government took office. For the year to June 1979 it was 8.8 per cent which was below the average for the OECD countries.

The priority given by the Government to the attack upon inflation has been vindicated by the steady improvement in Australia’s economic health over the past three and a half years.

That improvement strengthened and broadened in 1978-79.

Real gross domestic product is presently estimated to have increased by 4.7 per cent.

It was, of course, a very good year for the rural sector, with a most gratifying rise in real farm product of 36 per cent.

Growth elsewhere, while less spectacular, was still quite firm.

On current estimates, real non-farm product grew by 2.8 per cent.

Business fixed investment recorded an increase of 10 per cent in real terms.

Private dwelling construction has also picked up.

Overall business profits improved last year. This process must continue if recovery is to be consolidated.

Civilian employment grew by 1 .4 per cent over the course of the year. Most encouragingly private sector employment rose by about Vh per cent and, for the first time since 1973-74, there was a rise in jobs in manufacturing industry.

Our balance of payments turned sharply for the better in the second half of the financial year.

It was especially pleasing to see a strong growth in manufactured exports reflecting a substantial improvement in the competitiveness of Austraiian industry.

Confidence in the strength and stability of the Australian economy continued to grow.

Private capital inflow for 1978-79 was the largest for seven years.

There was also a marked rise in the number of major investment projects foreshadowed.

These developments clearly show that policies which address fundamental economic problems do yield results.

Lower inflation does inspire greater confidence and encourage greater risk taking.

Lower costs do make our industries more com.petive; they do encourage development; and they do, thereby, provide jobs.

The clear benefits of firmly pursuing an antiinflationary policy over more than three years are reason enough to reaffirm that policy tonight.

Moreover, the difficulties faced by the entire industrialised world- including Australia- over the next year in responding to fresh inflationary pressures make it all the more essential that fighting inflation be the hallmark of this Budget.

In doing so we should remember that no Government can guarantee that price rises will never occur; indeed, some price rises are inevitable.

The rise in the price of oil is a case in point.

Our policy in respect of crude oil is to conserve our resources through a reduction in consumption, to promote exploration and to encourage the use of alternative energy sources.

There is no way this policy can be effectively pursued unless the price of Australian crude oil is set at the world level.

This means we now feel the full effects of price increases by the OPEC countries.

Oil prices alone will add directly about 1 ½ per cent to the Consumer Price Index in 1979.

We might wish that we could isolate ourselves from higher world oil prices.

But to have persevered with the old pricing policy would merely have delayed the,inevitable change and would have run counter to our energy objectives.

Ultimately the change would have been forced upon us: Ultimately it would have been necessary to recognise that if something is scarce, artificially holding down its price will make it even scarcer.

If we had delayed the change the eventual dislocation would have been all the greater.

page 48

THE 1978-79 BUDGET OUTCOME

The Budget deficit in 1978-79 was $665m higher than estimated when the Budget was brought down last August.

The higher deficit was not due to a relaxation of expenditure restraint. Outlays grew by 8.4 per cent which was only 0.6 per cent greater than estimated in the Budget itself.

Most of the higher deficit was due to a revenue shortfall of $490m largely in the areas of provisional and company tax.

Tax avoidance played no small part in the lower revenue collections in these two areas.

Of the total revenue shortfall, $ 180m was due to tax avoidance over and above the allowance which had been made for that when the Budget figures were prepared last year.

To illustrate the continuing nature of the tax avoidance problem, I point out’ that the total amount of income tax outstanding at 30 June 1979 included an abnormally high figure of $433m attributable to specific tax avoidance schemes against which the Government has taken action.

This amount is in effect tax in dispute arising from these schemes. Given the nature of the processes involved, it is not assumed, for the purpose of the revenue estimates, that any of this amount will be recovered in 1 979-80. .

In addition, in preparing this year’s estimates of revenue it has been necessary to allow a sum of $250m to cover further possible loss of revenue through tax avoidance.

page 48

THE SHAPE OF THE BUDGET

I have already explained the economic needs to which this Budget must respond.

Accordingly, we have decided upon a major reduction in the size of both the total and the domestic deficits.

In doing so we have continued firm restraint over our expenditures.

The containment of Government spending has been one of the central elements of our economic policy.

It is worth noting that in the three years to 1972-73 Commonwealth Budget outlays grew by an average of 4% per cent per year in real terms; in the three years to 1975-76, by 10!6 per cent per year; and in the three years to 1978-79 by only 1 per cent per year.

There is growing and I believe proper sentiment in the community towards lower taxation and smaller government.

However, it is all too often the case that enthusiasm for taxation reductions and for the general restraint on expenditures which makes these reductions possible is not matched by a willingness to accept the consequences of expenditure reductions in particular areas.

It is the Government’s responsibility to achieve a proper balance between these competing pressures.

No one should be under any illusion that the task is easy.

It is often compounded by unexpected changes in the need for certain government services. For example, an examination of our defence needs earlier this year showed that we required a greater commitment to defence spending.

This priority will undoubtedly command the support of the Australian community but, obviously, it comes at a price.

Furthermore, the need for social security spending- which is the largest single item in the Budget- can increase through circumstances not always within the control of any government.

The proportion of social welfare pension and benefit recipients in the community has about doubled since 1971-72.

Whilst a considerable part of this increase results from an extension of benefits such as the removal of the means test for those aged over 70 and the introduction of the sole parent benefit, social and demographic factors have also swollen the social welfare bill.

These include the aging of the population, the greater tendency towards early retirement, the increased incidence of single parent families, and a sharp rise in the number of World War II veterans becoming eligible for the service pension.

However, all in all, this Government’s record in expenditure restraint speaks for itself.

On the revenue side I noted in my statement of 24 May that it was not possible to make final decisions about revenue measures for 1979-80 until closer to the Budget.

I also foreshadowed in that statement that it would not prove possible to both restore tax indexation for this financial year and remove the income tax surcharge imposed in the last Budget.

In the final event, we have been able, within the context of a responsible Budget, to remove the surcharge from 1 December.

As it happened, there were major changes in the revenue picture between May and final preparation of the Budget.

One of the main changes related to the crude oil levy.

Prior to the new arrangements I announced in May, it could have been expected that, on the basis of then posted OPEC prices, revenue from the levy would have been $ 1,363m in 1979-80 or $ 1 74m more than actual receipts in 1 978-79.

Revenue from the levy is now estimated to be $2,023m, or about $660m greater than the earlier estimate.

Of this additional amount, $140m reflects the new arrangements concerning the levy on parityrelated oil announced in my statement in May and fully set out by my colleague the Minister for National Development on 29 June 1979, had posted OPEC prices remained at their May levels.

The remaining $520m thus represents the additional revenue flowing from the further price increase announced by OPEC on 28 June.

But this does not mean that when we came to finalise the Budget we had $520m more in hand than we had supposed on 24 May.

In particular, policy decisions aside, estimates of other revenue items were some $400m lower than the preliminary revenue estimates available in May.

I shall now give details of expenditure and revenue decisions.

page 49

OUTLAYS

I turn firstly to expenditure.

Many of the Government’s 1979-80 expenditure decisions have already been announced. Details of these and the others I am about to announce are contained in the accompanying Budget documents.

page 49

DEFENCE

Positive steps are being taken to maintain and improve the operational effectiveness of our defence forces.

The Budget provision for defence expenditure this year is $2, 887m. This is a rise of $281m and implies an increase of 2.6 per cent in real terms.

The Minister for Defence will keep the Parliament informed of particular decisions made by the Government in this important area.

page 49

EDUCATION

Programs of the Education Commissions

The provisions already announced for the Tertiary Education Commission will maintain total intakes of students into universities and colleges of advanced education in 1980 at current levels and permit substantial real increases in activity in technical and further education.

Present real levels of recurrent support for schools will be maintained in 1980 and in some areas, such as migrant education, increased. The prospective decrease in capital expenditure is in line with a levelling off in total enrolments in schools and projections of a downward trend throughout the 1980s.

Overseas Student Charge

Commencing with the 1980 academic year, private overseas students who enrol at an Australian university or college of advanced education for the first time, or who change courses, will be charged between $1,500 and $2,500 per year towards the cost of their tuition.

Ths charge is consistent with overseas practice where foreign students attending tertiary institutions are required to contribute to the cost of their education. The move will also assist in alleviating the current excess demand for places available to overseas students.

This charge is estimated to yield about $6m in 1979-80 and will help to defray the costspresently met in full by Australian taxpayers- of educating private overseas students in Australia.

Full details of these new arrangements will be announced after consultations have been held with major source countries.

Student Assistance Schemes

The Government has decided to adjust the means tests used for determining student benefits to reflect past increases in average weekly earnings. There will be no change in the level of those benefits in 1980.

These adjustments are estimated to cost $3. 1 m in 1 979-80 and $6.5m in a full year.

page 49

WELFARE PAYMENTS

Budget outlays classified as Social Security and Welfare Payments are estimated at $8,92 5m in 1979-80, an increase of 9.6 per cent and equivalent to 28 per cent of total outlays.

Indexed Pensions and Benefits

Last year when the Government took its decision to introduce annual indexation adjustments of social security and repatriation pensions and benefits, it was with the prospect of a lower rate of inflation than now prevails.

In the event this expectation was not realised. Following many representations to the Government, it has been decided to restore twice yearly automatic indexation for all indexed pensions and benefits.

This means that in addition to the forthcoming November increase, there, will be a further increase in May 1980 in line with the rise in the Consumer Price Index over the six months to December 1979.

The additional cost of restoring twice yearly indexation is $63m in 1 979-80.

Pensioner Fringe Benefits

We have decided to extend eligibility for Pensioner Health Benefit Cards to supporting parents and their dependants. This means that supporting parents will be eligible, as are widows and other sole parents in similar circumstances, for certain fringe benefits, such as free pharmaceuticals.

The basic income test limits for eligibility for Pensioner Health Benefit Cards have not been altered since 1973. This has resulted in the loss of this particular benefit by large numbers of pensioners. As a consequence, the Government has decided to increase these limits as follows: from $33 to $40 per week in respect of single people; and from $57.50 to $68 per week in respect of married couples.

These extensions will be effective from 1 November and are estimated to cost a total of $ 13m in 1979-80 and $23m in a full year.

The changes to welfare benefits just outlined will also be available to repatriation pensioners.

In addition, as promised in the 1977 policy speech we have decided that, from the first pension pay-day in February 1980, the Service Pension will be available, on a similar basis as for British Commonwealth veterans, to those veterans who served as members of the formally raised forces of allied countries in any war or warlike operations in which Australia participated.

The Government will re-introduce free medical and hospital treatment for all conditions for all veterans who received TB pensions prior to 2 November 1978.

There will also be increases in a range of benefits available to specially disadvantaged Repatriation beneficiaries including Orphan’s Pensions, Attendant’s Allowance, Recreation Transport Allowance, Gift Car Allowance and Clothing Allowance.

The rate of Repatriation Funeral Benefit will be increased by $200 to $300 as from 1 November 1979.

My colleague, the Minister for Veterans’ Affairs, will be announcing full details tonight.

The total cost of these changes is estimated at $ 10.7m in 1979-80 and $27.6m in a full year.

Other Programs

Other provisions which indicate this Government’s concern to assist needy groups include: $62.5m for the construction of homes and hostels for aged persons, an increase of $9. 8m; a further $4m for senior citizens centres; $69.2m for assistance for pre-school and child-care projects in the States and Northern Territory, an increase of $5.4m; $39. 3m for handicapped persons facilities, with further approvals up to $5m for funding in 1980-81; and grants totalling $500,000 to community welfare agencies which are in need of support in providing emergency assistance to members of the community.

page 50

ABORIGINALS

The Budget also provides $125m for special assistance to Aboriginals through programs administered by the Department of Aboriginal Affairs; this is an increase of about $9m on 1978-79.

page 50

HEALTH

Hospital Payments

The Commonwealth will provide an estimated $1 194m to the States and Territories in 1979-80 under the cost-sharing arrangements for public hospitals.

But for the increase in public hospital charges effective from 1 September 1979, this amount would have been much greater.

As foreshadowed, an independent inquirywith the powers of a Royal Commission- is to be established to investigate and report on the efficiency and administration of hospitals.

It is planned that an interim report be available by 30 June 1980.

Medical Benefits

Expenditure on medical benefits is estimated to increase by $64m in 1979-80 to $593m, not withstanding the previously announced changes which are to apply from 1 September 1979.

In the absence of those changed arrangements, the medical benefits bill in 1979-80 would have been about $ 1 80m higher.

Pharmaceutical Benefits

Legislation is to be introduced to increase the patient contribution for pharmaceutical benefits supplied under the National Health Act to the general public from $2.50 to $2.75 per prescription.

This increase will be effective from 1 September and is estimated to reduce Commonwealth outlays on pharmaceutical benefits by $5m in 1979-80 and by $7m in a full year.

Eligible pensioners- those holding a Pensioner Health Benefits Card- will, however, continue to receive their pharmaceutical benefits free of charge.

The Government is also proposing to examine the range of drugs available under the National Health Act with a view to reducing the costs of the scheme by up to $20m a year.

The Government will shortly receive the report of the Inquiry into the Pharmaceutical Industry- the Ralph Inquiry.

page 51

OVERSEAS AID

Assistance under the overseas aid program is estimated at $485m in 1979-80, an increase of $29m.

page 51

IMMIGRATION AND REFUGEE PROGRAMS

Assisted Migration Program

Provision is made in the estimates for an assisted migration program of 23 500 persons in 1979-80, approximately 5000 more than last year.

This total includes up to 14000 Indo-Chinese refugees, compared with 12 000 in 1978-79.

Services to Migrants

Some $15m will be provided in 1979-80 for the continuing implementation of the Galbally recommendations to provide special services to migrants.

An amount of $24.1 m has been allocated for the Adult Migrant and Refugee Education Program, an increase of $6. lm.

Departmental Charges

Charges are to be introduced to help offset the administrative costs incurred by the Department of Immigration and Ethnic Affairs in providing certain of its services.

These charges, which will be detailed by the Minister, are estimated to yield $2.3m in 1 979-80 and $4m in a full year.

page 51

CULTURE AND RECREATION

The Budget provides $3 1 9m for cultural and recreational activities, $38m more than in

1978- 79.

This includes $ 189.2m for the ABC and associated activities. Over the next three years the ABC will also be permitted to retain, for its own purposes, increases in revenues from its entrepreneurial activities.

The total also includes: $26. 3m for assistance to the arts through the Australia Council; $ 17.6m for the National Gallery, including $ 1 0. 1 m for its new building; $4.2m for the National Parks and Wildlife Service; and $2. 7m for sports development.

page 51

HOUSING

Welfare Housing

As already announced, the Commonwealth will provide $2 60m to the States for welfare housing in 1979-80.

Of this, $100m will be provided by way of grants.

This compares with grants of $ 14m in 1 978-79 and will enable substantially increased assistance to be extended to pensioners, Aboriginals and other disadvantaged groups.

Homes Savings Grants

As I announced in May, the Homes Savings Grant Scheme has been modified by the introduction of a tapered dwelling value limit with the aim of directing assistance to those most in need.

However, because of the build-up of approvals awaiting payment, outlays are estimated to increase from $20m in 1978-79 to $75m in

1979- 80.

Private Sector Housing

Activity in the private sector housing area has strengthened during 1978-79. This has been aided by the record amounts of finance made available by the major housing lenders.

It is the Government’s policy that a high priority for housing finance be maintained consistent with overall monetary policy.

Lending institutions are again being informed of the Government’s wish that, within the parameters of monetary policy and subject to their own commercial judgment, they lend to home seekers to the maximum extent.

page 52

NATIONAL WATER RESOURCES PROGRAM

The allocation for the National Water Resources Program is to be increased from $20m to $25m in 1979-80.

This will enable a number of new projects to be commenced, including urgent salinity control and drainage works in the Murray Valley.

page 52

INDUSTRY MATTERS

Air Navigation Charges

It is the Government’s intention to fully recover costs incurred on the domestic trunk airline sector over the next three years. To this end we will be seeking annual increases of 25 per cent in air navigation charges for domestic airlines over that period.

Air navigation charges for the general aviation sector are to be raised by 20 per cent.

These increases are estimated to yield a total of about $4m in 1979-80 and $8m in the first full year.

Crawford Report

The recommendations of the Crawford Study Group on Structural Adjustment have been receiving careful consideration and the Minister for Industry and Commerce will make a detailed statement on the Government’s response shortly.

I note, however, that in respect of two of the principal recommendations in the Reportencouragement of exports and industrial research and development- this Government already has a commendable record.

Export Incentive Grants

A total of $2 15m is provided for export incentive and market development grants, an increase of$ 157m over 1978-79.

This large increase reflects the full-year effects of the generous export incentives scheme introduced last year, the strong growth in eligible exports, and steps taken to expedite the processing of claims.

Industrial Research and Development

Industry will also benefit from a substantial increase in the provision for industrial research and development.

Expenditure for this purpose increased from $14m in 1977-78 to $24m in 1978-79 and is estimated to increase further to $32m in the current year.

Tourist Industry

The tourist industry has the potential to generate a large number of additional employment and income opportunities in Australia. To foster this industry, the Government has decided to provide additional assistance for its expansion and development.

The Minister for Industry and Commerce will announce details but I mention, as one illustration, that $8.2m will be provided to the Australian Tourist Commission in 1979-80 compared with $4.2 million last year.

I shall have more to say about this industry in the Receipts section of this Speech.

page 52

REGIONAL DEVELOPMENT

A further $ 10.5m will be available under the Commonwealth Regional Development Program to encourage the development of selected non-metropolitan centres, together with a further $5m for the Albury-Wodonga growth centre.

page 52

ASSISTANCE TO TASMANIA

The Callaghan Report identified certain areas where special assistance might be provided to Tasmania and the Commonwealth proposes to offer assistance for a number of projects.

These offers amount to $ 1.3m in 1979-80 and include assistance for native forestry, restoration and development in the Port Arthur region, the establishment of a fish centre in Hobart and a pilot industrial estate at Legana; and reequipment of the Launceston Precision Tool Annexe.

The Commonwealth has also agreed to fund, by way of special grants, the full cost of constructing a second bridge across the Derwent River at Hobart.

The total cost of this project is estimated at about $32m of which $ 1 m is likely to be required in 1979-80.

page 53

MANPOWER AND TRAINING PROGRAMS

A total of $ 131m will be provided for training programs in 1 979-80 to assist some 1 70,000 Australians to improve their own employment prospects and to help fill gaps in the supply of skilled workers.

The total provision represents a reduction of $27m, mainly because of a reduction of almost $50m, to $68m, in estimated expenditure on the National Employment and Training System (NEAT). This in turn reflects the steps taken by the Government to limit subsidy payments under the Special Youth Employment Training Program (SYETP) to people who would not otherwise have been employed.

Expenditure on the CRAFT program, under which employers receive tax-exempt rebates for the costs of releasing apprentices to attend approved trade and training courses, is estimated to increase by $26m to $54m.

page 53

STATES, NORTHERN TERRITORY AND LOCAL AUTHORITIES

Taken together, net Commonwealth payments to the States, the Northern Territory and local government authorities are estimated to increase by 7.8 per cent in 1 979-80, to $ 1 1 ,608m.

Payments to the Northern Territory Government amount to $442 m and comprise both general and specific purpose payments akin to those made to the States.

The total also includes $222m- an increase of $42m or 24 per cent- in tax-sharing grants to local government authorities and reflects our decision to increase their share of 1978-79 personal income tax collections from 1.52 per cent to 1.75 per cent.

The Government’s election promise to increase the share to 2 per cent will be met by the time of the next Budget.

page 53

MAINTENANCE OF EXPENDITURE RESTRAINT

For its part the Commonwealth intends to maintain maximum restraint on expenditures in 1979-80 and to pursue economies and eliminate wasteful practices wherever possible.

In this connection I mention that last year there was a further net reduction of 780 in areas subject to staff ceilings and that the overall ceiling this year will be retained at about the same level as in 1978-79.

In each of the past four years this Government has held actual spending below, or very close to, the Budget estimate of total outlays and we aim to maintain that good performance in 1 979-80.

page 53

RECEIPTS

In turning to the receipts side of the Budget, I deal first with personal income tax.

page 53

PERSONAL INCOME TAX

As I have already indicated, it has only proved possible to remove the income tax surcharge. Tax indexation will not be restored for 1979-80.

Whether or not tax indexation can be restored in 1980-81 will depend upon general economic conditions. Wage decisions by the Conciliation and Arbitration Commission will be relevant to that.

The Government hopes that the increase in take-home pay of wage and salary earners as from 1 December will encourage greater wage restraint.

Let there be no mistake. The Government wants to be in a position to restore tax indexation but economic circumstances have to be right.

One of the factors which will be relevant is the extent to which wage and salary increases contribute to inflation.

From 1 December 1979, the standard rate of personal income tax will be reduced from the present effective 34.57 per cent to 32 per cent for PA YE purposes and PA YE tax instalment deductions will accordingly be reduced from that date.

There will be corresponding reductions of 2.57 per cent in the rates applying to higher incomes, to 46 per cent and 60 per cent.

For a person on average weekly earnings, the reduction in tax instalments and increase in takehome pay will be about $4.45 a week.

Rates for assessment of 1 979-80 tax will be derived as a weighted average of the present effective scale for PA YE purposes and the scale to apply from 1 December. For example, the ‘standard ‘ rate on assessment for the year as a whole will on that basis be 33.07 percent.

Provisional tax payments for 1979-80 will also be based on that weighted-average rate scale where the taxpayer self-assesses. In accordance with past practice, somewhat higher rates will apply for provisional taxpayers who do not self-assess.

There will also be adjustments to provisional tax arrangements to take account of the withdrawal of the Trading Stock Valuation Adjustment from the beginning of the current year.

Further details of these measures are contained in Statement No. 4.

page 54

PROVISIONAL TAX THRESHOLD

Provisional tax is not at present charged to salary and wage earners, pensioners and superannuitants if income subject to provisional tax is less than $400. This amount, which has not been changed since 1970, is to be increased to $1,000. This will have the effect of freeing large numbers of taxpayers with small amounts of property and investment income from the liability to pay provisional tax.

page 54

PRIVATE COMPANIES

A frequent concern of small business is the maintenance of adequate working capital. The Government acted in 1976 to ease the distribution requirements for private companies under Division 7 of the Income Tax Assessment Act by increasing the retention allowance from 50 per cent to 60 per cent.

We have now decided to go further. For distributions in respect of taxable incomes of 1978-79 and subsequent years, the retention allowance for trading or business income will be increased from 60 to 70 per cent.

No change is being made to the 10 per cent retention allowance for property income or to the rule tht there is no retention allowance for dividends that one private company receives from another.

The increase in the retention allowance will have negligible cost in 1979-80 but is estimated to cost $30 m in a full year.

page 54

DEPRECIATION OF INCOME-PRODUCING BUILDINGS-TRAVELLER ACCOMMODATION

To encourage the provision of accommodation for tourists and travellers, the Government has decided to introduce a system of depreciation allowances for new income-producing buildings, or extensions to existing buildings, used for the accommodation of travellers, where construction commences after today.

Eligible buildings or extensions to buildings must contain at least 10 guest rooms.

Depreciation will be allowed at a flat rate of Vh per cent of eligible cost.

This deduction will have no cost in 1979-80 but a progressively increasing cost in subsequent years.

Further details will be announced at a later date.

page 54

STORAGE FACILITIES FOR GRAIN, HAY OR FODDER

Since 1 973, on-farm facilities for the storage of grain, hay or fodder have been subjected to depreciation in the usual way.

In the light of recent heavy grain harvests and the consequent pressures on bulk grain facilities, and in order to encourage the holding of hay and fodder reserves against the requirements of poor seasons, a special rate of depreciation will be allowed in respect of on-farm facilities for the storage of grain, hay or fodder in conducting a primary production business.

A rate of 20 per cent per annum will apply to such facilities which are ordered, or the construction of which by the taxpayer commences, after today, so that the cost of such facilities is written off in 5 years.

The investment allowance, at the 20 per cent rate, will continue in respect of eligible storage facilities covered by the new special rate of depreciation.

This measure, which will have negligible revenue effects in 1979-80, is estimated to cost $6m in a full year.

page 54

LIMITATION OF VALUE OF MOTOR CARS FOR DEPRECIATION AND LEASING PURPOSES

Whilst the Government recognises that cars are needed in many businesses and professions it does not believe there is any reason why the revenue should subsidise the full cost of expensive luxury vehicles used for such purposes.

The Government has decided to limit to $ 1 8,000 the amount which may be depreciated for income tax purposes for motor cars and station wagons (including four-wheel-drive vehicles, leased vehicles, and those used to provide services to the general public) ordered after tonight.

The excess of the price above $18,000 will not be depreciable and balancing adjustments on disposal will be calculated by reference to a deemed cost of$ 18,000.

The limit of $ 1 8,000 for depreciation purposes will be indexed annually.

The gain to revenue from this proposal will be negligible in 1 979-80 and $ 1 5m in a full year.

I mention also that the Government is concerned that some lessees of cars and station wagons are, at the end of the lease, buying the vehicles for a price that enables them to profit by reselling the vehicles at their market value.

As the law now stands, the resulting profit may not be taxable, even though it effectively represents a recoupment of tax deductible lease charges.

Accordingly, the Government has decided to amend the law to ensure that any such profit is taxed on a basis corresponding with that applied where a person sells plant on which he has previously been allowed depreciation.

The amendment will apply in respect of all cars and station wagons that are purchased from lessors by the lessee or a relative or other associate after tonight.

The gain to revenue from this proposal will be negligible in 1979-80 but about $25m in a full year.

Further details of these measures are given in Statement No. 4.

page 55

ENERGY CONSERVATION

In his statement of 27 June on Energy Policy, the Prime Minister announced a number of taxation measures designed to conserve scarce oil resources.

Those measures will be supplemented by two income tax concessions related to conversion of oil-fired industrial equipment to other energy sources.

The cost of such conversion or adaptation of an existing unit will be allowed as an outright deduction in the year in which it is incurred.

Where an existing oil-fired unit of property is wholly replaced by one that uses other energy sources, the replacement unit will qualify for normal depreciation but will also attract a special conversion allowance at a rate of 40 per centdouble the investment allowance that may otherwise have applied.

To qualify, the conversion must be completed and the equipment be in use by 30 June 1982.

In addition, the exemption from sales tax to kits used to convert vehicles to LPG use is to be extended to compressed natural gas conversion kits, and further extended to cover conversion kits for all internal combustion engines.

page 55

REBATE FOR PETROLEUM EXPLORATION AND DEVELOPMENT

In order to provide further encouragement for the discovery and development of petroleum resources throughout Australia, the Government has decided to extend the present scheme of tax rebates for share capital subscribed for offshore petroleum exploration and development to subscriptions for onshore petroleum exploration and development.

In addition, it has been decided to extend from two to four years the period within which capital subscribed must be spent in order to qualify for a rebate.

These changes will apply to share capital subscribed after tonight. The legislation will of course contain appropriate safeguards against abuse.

There will be no revenue cost in 1979-80, but an estimated $6m cost in a full year.

page 55

SALES TAX ON EQUIPMENT USED BY BLIND OR DEAF PERSONS

The sales tax law already provides exemption for a range of appliances and other goods used by blind or deaf persons.

To avoid the need to amend the law frequently to cater for the development of new aids, the Government has decided to provide a general exemption that will apply to all articles designed and manufactured expressly for and of a kind used by blind or deaf persons.

The exemption will apply after tonight.

The cost to revenue of the new general exemption is estimated to be $ 1 00,000 in a full year.

Details of this and some other measures in the sales tax area will be given in the enabling legislation to be introduced later this evening.

page 55

COAL EXPORT DUTY

The existing coal export duty of $3.50 per tonne on high quality coking coal will be reduced for open-cut operations, and major expansion of such operations, commencing production after 30 June 1 980, and for existing and future underground mines.

The rate of duty to apply will be $1.00 per tonne- the rate presently applying to exports of lower quality coking coal.

These changes will take effect on 1 November 1979.

The cost to revenue is estimated to be $ 12m in 1979-80 and $ 19m in a full year.

page 55

BUDGET OVERVIEW

Total outlays in 1 979-80 are estimated to increase by 9. 1 per cent to $3 1 ,692m.

Total receipts, after the measures I have outlined, are estimated to increase by 15.4 per cent to $29,499m.

The overall deficit is therefore estimated at $2, 1 93m, a reduction of $ 1,285m on 1 978-79.

After allowance for overseas transactions, the domestic deficit is estimated at $875m in 1979-80, much less than half the domestic deficit of $2,258m in 1978-79, and the lowest for six years.

To see these deficit figures in perspective it should be noted that the projected Budget deficit as a percentage of GDP has been reduced from last year’s outcome of 3.4 per cent to an estimated 1.9 percent.

page 56

ECONOMIC OUTLOOK

This section of the Budget Speech traditionally contains views on likely developments in the economy during the year ahead.

They do not, of course, represent promises or guarantees by the Government as to the outcome in certain areas. They never can.

Circumstances can alter quickly to radically change the basis on which original assumptions and forecasts have been made.

The monetary outcome for last year is a good example. A major part of the change was due to the unexpectedly large turnaround in private sector foreign exchange transactions during the year and the increase in the Budget deficit.

I have already canvassed the further progress of economic recovery in 1 978-79 as well as drawing attention to the heightened inflationary pressures facing the industrialised world.

Quite apart from the adverse developments caused by oil price movements, 1979-80 will be a difficult year for the world economy.

Nevertheless, our prospects are better than those of many other countries.

Activity in the non-farm sector is expected to continue to expand in 1979-80, at a rate of over 3 per cent.

Following last year’s exceptionally favourable rural conditions, we must expect some falling back in farm production. However, given reasonable conditions farmers should still have a good year.

GDP as a whole might increase by only 2 to 2 Vi per cent this year.

Private investment should again contribute quite strongly to aggregate demand.

Although plant and equipment investment will probably grow less dramatically than in 1978-79, the building and construction component of business investment is likely to keep on expanding firmly.

Dwelling investment is in a moderate upswing phase.

Non-farm stocks are expected to accumulate fairly steadily during the year.

However, total public spending on goods and services may increase somewhat more slowly than in 1978-79.

Private consumption spending has been fairly subdued and there are no evident factors which suggest any major change in that trend in the months immediately ahead, although the increase in take-home pay from I December next should help.

The contribution to aggregate demand from net exports of goods and services is likely to be quite strong.

As a result, the improvement in the current account deficit which occurred during the second half of last year should be maintained. Whereas the deficit amounted to $3, 156m in 1978-79, it could decline by several hundred million dollars in 1979-80.

There are also good prospects of a continuation of the recent stronger rate of net private capital inflow.

Taken together, these improvements would, of course, permit a substantially lower overseas borrowing program by the Commonwealth than last year.

Against this background, we expect a moderate growth in job opportunities during the year.

Wage and salary earner employment is expected to grow by about 1 per cent.

Although the level of unemployment remains high, recent trends in labour force participation rates have combined with growing employment to hold it broadly steady over the past year.

We do not expect unemployment to improve in the year ahead.

As to the inflation outlook, factors already in the system are likely to lead to higher rates of increase in price indices in the months immediately ahead, before a renewed downward trend can be established.

Those factors include recent oil price increases still largely to be reflected in the Consumer Price Index, higher costs of health care as a result of changed financing arrangements and increases in doctors’ fees, and some acceleration of wage costs.

For 1979-80 as a whole, the CPI is presently estimated to increase by a little above 10 per cent.

It is expected to peak with a relatively large December quarter increase due to the coincidence of the factors I have mentioned.

It is essential for our future economic prosperity that the temporary factors putting upward pressure on prices in recent months do not become permanently built in to the inflation base.

For this reason, restraint on the part of all those involved in wage determinationincluding, not least, the arbitral authorities themselves- is no less vital than it ever was.

page 57

MONETARY OUTLOOK

I turn now to the monetary prospect for the year ahead.

First, the expected improvement in the balance of payments on private account is likely to result in an addition to domestic liquidity in 1979-80, in contrast to the reduction from this source over 1978-79 as a whole.

This involves a turnaround in private sector foreign exchange transactions which has already become apparent in recent months.

The turnaround is expected to amount to approximately $ 1,000m or more and will convert the negative impact of these transactions of some $250m on the money supply last year to a sharply positive impact in 1979-80.

Another large wheat harvest is being foreshadowed. The Government will, however, again seek arrangements for financing advances to growers so as to minimise the addition to liquidity. As was the case last year, this will not be at extra cost to growers.

The large reduction in the domestic Budget deficit will, of course help greatly in moderating the growth of the monetary aggregates.

Moreover this year the borrowing requirement of the public sector as a whole will be markedly reduced; the net reduction on account of the Commonwealth Budget and approved Loan Council programs is some $1 billion.

I reaffirm that the Government’s monetary policy is directed at providing adequate funds for sustainable expansion in private sector activity and employment, while continuing to bear down steadily on inflation and inflationary expectations.

There is a need for growth in the monetary aggregates this year to be reduced from the rates of 1978-79. The Government has already taken a number of measures to that end.

As was evident in 1978-79, circumstances can arise which render appropriate a monetary outcome different from any initial projection at the outset of a financial year.

For 1979-80, it is believed that growth in the broadly defined measure of the volume of money (M3) of about 10 per cent over the course of the year would be compatible with policy.

Economic developments throughout the year may make appropriate an outcome either above or below that projection.

However on present assessments it seems appropriate that the outcome be not more than ten percent.

There will be a fairly sizeable bond-selling task for that outcome to be achieved.

But, given the expected trends in underlying conditions, and with appropriate flexibility in the operation of policy, it should be manageable.

I reaffirm the Government’s commitment to the importance of monetary control in bearing down on inflation and for the pursuit of a path of economic stability.

With this commitment, supported by our continued emphasis on fiscal restraint, we look forward to further sustainable growth in activity, and the prospect of seeing, by the latter part of the year, a return to a downward trend in the rate of inflation.

page 57

CONCLUSION

This Budget has been framed to meet the needs of the Australian economy in 1979.

Its object is to reduce inflation and promote sound and broadly based growth.

It provides incentive for both individuals and businesses within a responsible overall framework conducive to our longer term economic goals.

It significantly reduces the call of Government upon the nation’s financial markets.

It equips Australia to succeed in a world environment of rising inflation and intensifying competition.

I commend it to Honourable Members.

That the debate be now adjourned.

Question resolved in the affirmative.

page 60

STATEMENT No. 1- SUMMARY OF THE 1979-80 BUDGET

page 60

BUDGET AGGREGATES

The key Budget aggregates for 1979-80 are summarised in the following table, together with comparable data for 1978-79: The 8.4 per cent increase in total Budget *outlays* in 1978-79, although slightly higher than the Budget estimate (7.7 per cent), was the smallest increase for ten years. The budgeted increase of 9.1 per cent in 1979-80 would be the next smallest increase since 1968-69. In real terms the Budget estimate for 1979-80 represents much the same level of outlays overall as in 1978-79. Total outlays as a proportion of GDP peaked at 30.3 per cent in 1975-76 and the proportion has tended downward since then. The proportion was 28.6 per cent in 1978-79 and, on the basis of present estimates, a further reduction can be expected in 1979-80. Total *receipts* are estimated to increase by 15.4 per cent in 1979-80. This is a relatively strong increase compared with 1977-78 (9.8 per cent) and 1978-79 (8.9 per cent) and reflects, on the one hand, changes to tax rates and arrangements, principally in the personal income tax area, and on the other, strong growth in some components of the tax base, especially the taxable income of primary producers, and the levy on crude oil. Total receipts in 1979-80 are equivalent to about 93 per cent of estimated outlays. This compares with 88 per cent in 1978-79 and is the highest such ratio since 1973-74. {: .page-start } page 61 {:#debate-85} ### OUTLAYS The following table shows outlays in 1978-79 and estimates for 1979-80 classified according to broad economic types of expenditure: The table shows: further strong growth in defence expenditure, cash benefits to persons and interest payments; rapid growth in the 'Other' category, largely because of the very large increases in the 1979-80 provisions for export expansion and market development grants and homes savings grants; and o modest growth in the Commonwealth's direct current expenditure (other than on defence) and a small decrease in the Commonwealth's direct expenditure of a capital nature (i.e. civil works, NCDC works, repairs and maintenance expenditures, etc). Estimates of outlays in 1979-80, classified by major functions, are set out and explained in detail in Statement No. 3. The table below summarises the figures for 1978-79 and estimates for 1979-80 in the functional format: The changes shown for most functional categories are affected by changed financial arrangements for the Northern Territory over the period 1977-78 to 1979-80 (for details, *see* Appendix and Budget Paper No. 7 - *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80).* The relatively small increase shown for Education, for example, reflects the fact that whereas all expenditure on schools and technical education in the Northern Territory was recorded under Education in 1978-79 a substantial part of comparable expenditure will be met by the Northern Territory from the block grant provided by the Commonwealth (which is recorded under the 'Not Allocated to Function' heading in 1979-80). Of the total increase, 5781 million - or approximately 30 per cent - is accounted for by outlays on Social Security and Welfare and reflects increases in benefit rates and a return to twice yearly indexation adjustments, together with prospective increases in numbers of beneficiaries of major pensions and benefits. A further S760 million (about 29 per cent of the total increase) is in respect of the 'Not Allocated to Function' category and mainly reflects higher tax sharing grants to the States (up 13.4 per cent) and local authorities (up 23.6 per cent), higher interest payments (up 10.6 per cent), an increase of $54 million in general purpose assistance to the Northern Territory, and an allowance of $35 million for prospective wage and salary increases (excluding defence). {: .page-start } page 63 {:#debate-86} ### RECEIPTS Total receipts in 1979-80 are estimated at $29 499 million, an increase of 15.4 per cent over receipts in 1978-79. In addition to the measures announced in the Budget Speech, decisions affecting revenue in 1979-80 were announced in the Treasurer's statement to the Parliament of 24 May 1979; in th& Prime Minister's Energy Policy statement of 27 June 1979 and in the Minister-for' National Development's statement of 29 June 1979 on excise levy rates for domestically produced oil. In the absence of the tax measures announced both prior to and in the Budget, receipts would have grown by an estimated 9.0 per cent in 1979-80, which compares with actual increases in total receipts of 9.8' per cent in 1977-78 and 8.9 per cent in 1978-79. The various taxation measures bearing on estimated receipts for 1979-80 are described in detail in the 'Measures' section of Statement No. 4. The table below shows Budget receipts in 1978-79 and estimated receipts in 1979-80 in summary form; details can be found in the 'Estimates' section of Statement No. 4. Much the largest increases in receipts are those from the levy on crude oil and from income tax on individuals. The very large estimated increase in revenue from the *crude oil levy* reflects the substantial increase in the import parity price from 1 July 1979 combined with the change in levy arrangements. Contributions from these and other factors to the total estimated increase in revenue from the crude oil levy are set out in Statement No. 4. The projected increase of some 1 8 per cent in collections of *income tax from individuals,* reflecting the effects of measures, includes an estimated increase in net PAYE collections of 15 per cent and an estimated increase of 32 per cent in receipts from other individuals. Tax payments by other individuals depend mainly on taxable income in the previous year and the large estimated increase principally reflects the very substantial increase in primary producer incomes in 1978-79. It is estimated that the measures in respect to indexation suspension and the standard rate scale for 1979-80 will contribute $1087 million to receipts. In the absence of those measures estimated collections of income tax from individuals would increase by about 10 per cent, rather than 18 per cent. {: .page-start } page 64 {:#debate-87} ### THE DEFICIT The Budget deficit for 1979-80 is estimated at $2193 million, a reduction of $1285 million on the deficit recorded in 1978-79. Allowing for an estimated increase of $98 million in the deficit incurred on overseas transactions - reflecting mainly increased outlays overseas in respect of public debt interest payments - the domestic deficit is estimated to decrease by $1383 million, from $2258 million in 1978-79 to $875 million in 1979-80. {: .page-start } page 64 {:#debate-88} ### ECONOMIC CONTEXT An account of the economic context of the. Budget, and of the post-Budget outlook for the economy in 1979-80, is presented in Statement No. 2. {: .page-start } page 64 {:#debate-89} ### HISTORICAL DATA Historical data on Budget transactions are presented in Statements Nos 5 and 6. Statement No. 5 provides a detailed account of the Budget outcome for 1978-79 and Statement No. 6 presents Budget and some broader public sector data for the period since 1969-70. {: .page-start } page 64 {:#debate-90} ### FUNCTIONAL CLASSIFICATION An Appendix describes the basis of the functional classification of Budget outlays used throughout the Budget Statements {: .page-start } page 65 {:#debate-91} ### TABLE OF CONTENTS {: .page-start } page 66 {:#debate-92} ### STATEMENT No. 2 - THE BUDGET AND THE ECONOMY The 1979-80 Budget has had to be framed against the backdrop of a resurgence of inflationary pressures, both internationally and at home, and developments which have focused world-wide attention upon a range of issues related to energy supply and usage. This Statement outlines recent and prospective trends in the Australian economy and in the international scene which form the environment to which macro-economic policy is addressed. Part I examines economic developments in 1978-79. Part II reviews macro-economic policy in relationship to the progress of economic recovery. Economic prospects for 1979-80 as they now appear are assessed in Part III. Part I Review of Economic Developments in 1978-79 {:#subdebate-92-0} #### Introduction Assessment of economic conditions draws on a large body of processed statistics, on less developed quantitative information and numerous indicators of a more qualitative kind. At any time the various indicators do not all convey consistent information; there is a need to weigh them together in coming to overall views. In that process it has been customary to pay considerable attention to the national accounts statistics. They are a most useful device, providing a comprehensive picture of developments in economic activity with particular reference to incomes and expenditures. The accounts draw together and set down in an articulated form a very large volume of primary information. The accounts are, however, sometimes subject to very considerable revision and on many occasions quarterly and even annual movements in individual components (and, less frequently, major aggregates) have appeared implausible in the light of other information. Difficulties in producing accurate but timely quarterly national accounts, particularly the 'constant price' versions thereof, have no doubt largely reflected the experience of high and variable inflation rates (with their associated index number and other problems in deriving 'constant price' estimates), increased flexibility in exchange rates and the general instability of the whole gamut of expenditure and income data. In a very variable world it is scarcely surprising that the quality of estimates, too, has been variable. The Statistician cautions in the foreword to this year's Budget Paper No. 9 that: Estimates of national income and expenditure have been prepared from a wide range of statistical sources, some of which are available quickly and some only with a delay of several years. Therefore, estimates for recent years, and especially for 1978-79, may be subject to considerable revision as firmer data come to hand. For example, because tabulations of income tax statistics do not become available until about two years after the end of each financial year, estimates of income of companies and non-farm unincorporated enterprises, and depreciation, and therefore the estimates of gross non-farm product are subject to substantial revisions for the two most recent years.' An indication of this process of revision is provided in Table 1 for the most generally used single measure of overall economic activity: non-farm product at constant prices. In the first half of the table the *initial* estimates are those published with the Budget immediately following the end of the year in question; the table traces the succeeding revised estimates at annual intervals (for a maximum of five years). The second half of Table 1 presents some closely related information and calculates some relevant average revisions. It is clear that quite major revisions have occurred to the estimates of nonfarm product growth and that there has been a pronounced though not invariable tendency for initial estimates to be revised upwards. Similar presentations of quarterly estimates would show the same tendency, since they are consistent with the annual data, but they would also display greater - and in some cases very great - volatility, especially for changes between adjacent quarters. This tendency to revision, and in particular the volatility in quarterly movements, is well recognised both by those who prepare and those who make professional use of the national accounts; for example, this Statement has for many years employed semi-annual figures as a better guide to trends than quarterly estimates. Even so, the national accounts are generally found, properly interpreted at any time, to be *broadly* consistent with the ensemble of other economic indicators. It should not be surprising that this is so since many individual indicators (e.g., retail sales, overseas merchandise trade) are inputs into the compilation of the national accounts. The fact that a statistical series is free from major revision does not necessarily imply that it is a better guide to what it seeks to measure than one that is subject to revision; however, the recent behaviour of the national accounts estimates, especially the tendency for initial estimates to be internally inconsistent on occasion, and particularly for individual quarters, and to move at odds with other indicators, has meant that reduced reliance can be placed on them when assessing short-term economic developments. It would appear that the national income and expenditure estimates for 1978-79, as published in Budget Paper No. 9 and the associated quarterly release, are subject to such qualifications in a number of important respects. Accordingly, while due attention is paid to the national accounts estimates in what follows, present indications from them are qualified where, on the basis of other information, it is judged that they have not provided an adequate description of recent economic developments. {:#subdebate-92-1} #### Demand and Output The course of economic activity in 1978-79 was more broadly-based than in any year since the onset of the recession in 1974. Private final expenditure picked up substantially, and this was accompanied by a significant slowing in public expenditure; the stock cycle turned to an accumulation phase in the first half of the year and there was a marked strengthening in exports in the second half. Bountiful seasonal conditions for cereal crops and improved prices for primary products, notably meat, saw farm product expand rapidly following four depressed years. This pushed growth in total gross domestic product ahead of expectations held at this time last year. There was a marked improvement in the competitive position of the manufacturing sector, and industrial production recovered over the course of the year. Employment expanded more rapidly than for some time. Overall, developments in 1978-79 represented a further major step in the recovery process. However, the continuing constraints on the economy pose some questions for the future of that process; these are addressed in Part II. The following paragraphs describe major developments over the last year or so. National accounts estimates provide the framework for the discussion but where appropriate they are qualified by other information. The commentary, including the accompanying charts, refers to annual and half-yearly movements. Unless otherwise noted, all figures mentioned are in constant price ('real') terms and (apart from full-year changes) are seasonally adjusted. Since the 'real' and money' economies are part and parcel of each other, the use of developments in real' expenditures as the starting-point for discussion is, though conventional, to some extent arbitrary. *Private final consumption expenditure* (Chart 1, panel a) has risen consistently for some two years now. The presently estimated rise of 2.5 per cent for 1978-79 as a whole was much the same as the growth in the previous two years. As such it appears to have been somewhat weaker than expected at this time last year. Estimated developments in disposable incomes, consumption and the saving ratio in recent years are set out in Table 2. The rise in the saving ratio in 1978-79 is attributable to the surge in farm incomes; abstracting from the farm sector there appears to have been a further winding down of the saving ratio during the year towards its long-run level. For the economy as a whole, however, the ratio remains high and there is clearly still scope for consumption to grow more strongly than real disposable incomes. *Private dwelling investment* (panel b), which had declined persistently since the last peak in late 1976, moved into step with other components of final demand in the second half of 1978-79 with a sharp increase equivalent to an annual growth rate of 17 per cent. This turnaround was sufficiently strong to yield a small increase in dwelling construction activity for the year as a whole, while the upward trend during the year suggests continued growth into 1979-80. The improved level of activity in the dwelling sector can be attributed in considerable measure to the rapid expansion in housing finance, beginning in the September quarter 1978. Reductions in mid-1977 and again last year in the proportion of savings banks' assets required to be held in cash, government securities or certain other prescribed forms enabled these institutions to lend more for housing. Meanwhile, the return of stocks of unsold new dwellings to more normal levels and the improved price competitiveness of new dwellings relative to established ones have enabled higher lending to be increasingly translated into stronger building activity. In last year's Statement there was some discussion of the background to the current dwelling activity cycle. Factors thought to bear on the depressed level and the changing pattern of demand included demographic changes - such as lower population growth and migration and reduced household formation rates - and an apparent switch in consumer preference towards previously-occupied dwellings. The conclusion drawn - that an extrapolation of past trend levels of new dwelling construction would substantially overstate sustainable demand - still applies. *Private business gross fixed capital expenditure* (panels c and d) rose strongly in 1978-79, predominantly in the first half of the year. *Non-residential building and construction* showed strong growth, the uneven pattern of which partly reflects the lumpiness of projects in this sector. The general pick-up evident since the second half of 1977 constitutes the first significant and sustained growth in this sector since the mining and office-building booms of the early 1970s. Moreover, the present expansion is quite broadly-based. After a major pick-up in the first half of calendar 1978, private investment in *plant and equipment* continued to expand in the second half. While the reduction in the investment allowance from 40 per cent to 20 per cent would have contributed to a bunching of expenditures in 1978, the robustness of this component of demand is indicated by the tendency for the high level to be sustained in the most recent half-year. The strong increase in imports in June quarter 1979, which appears to have included sizeable quantities of machinery and equipment, is a further indicator of the underlying strength of private investment in plant and equipment. Investment in plant and equipment is estimated as 11.6 per cent greater in 1978-79 as a whole than in the preceding year. The relatively buoyant state of business investment in 1978-79 underlines the improvement in the decision-making climate and is an indicator of the higher level of activity prevailing in the economy. Until recently, reduced inflation and inflationary expectations steadily weakened the bias towards shorter-term investments which prevailed in previous years. Improved competitiveness internationally has also been giving an incentive to expansion of capacity. Although less than they were, the real wage/productivity gap and the investment allowance have continued to provide incentives for labour-replacing investment. The expenditure categories discussed so far - private final consumption and private gross fixed capital expenditure - sum to *private domestic final expenditure* (panel e). Even on present estimates this aggregate recorded substantial growth in 1978-79. As Table 3 shows, private domestic final expenditure made a greater percentage points contribution to GDP growth in 1978-79 than in any year since 1973-74. *Government final expenditure* (national accounts basis, all governmentsChart 1, panel f) is estimated as having increased by 2.2 per cent in 1978-79, principally in the first half of the year. This growth was more than accounted for by an increase of 4.7 per cent in current expenditure; capital expenditure fell by 2.7 per cent according to present estimates. As Table 3 indicates, the direct contribution of public final expenditure to product growth was lower in 1978-79 than in the previous year. This more subdued performance was also reflected in a small further reduction in the ratio of total public sector spending to non-farm product, although this ratio remains very high compared with pre 1974-75 levels (see Chart 2). A breakdown of total public sector final expenditure into its Commonwealth and State and local components (Chart 3) indicates that expenditure in the State and local category has been accounting for the elevated level of this ratio. Thus, while the share of State and local government spending remains some 3.7 percentage points above its average between 1966-67 and 1972-73, that for Commonwealth expenditure is somewhat below that average. These figures do not, of course, tell the whole budgetary story; in particular, transfer payments - which loom very large in Commonwealth outlays - are not included. *Export* volumes (Chart 1, panel g) recorded very strong growth in the second half of 1978-79, making a substantial contribution to the increase in *total final expenditure* (panel h) and product growth (Table 3) for that period. This turnaround from the depressed levels of 1978 owes much to the boom farm conditions and improved demand for rural exports; but the increasing competitiveness of manufactured exports and higher demand for a number of Australian minerals have also been significant. For 1978-79 as a whole exports of goods and services are estimated to have been 1.4 per cent higher but, reflecting the upward trend, they rose by 8.2 per cent over the course of the year. *Import* volumes (panel j) expanded strongly in 1978 under the influence of the rapid growth of expenditure on plant and equipment, much of which was imported. In the second half of 1978-79, however, imports stabilised at about the level of the first half. With imports levelling off and exports expanding rapidly, *net exports* made a sizeable contribution to product growth in the second half of 1978-79, whereas they detracted from product growth in each half of 1978 (Table 3). Export and import performances in 1978-79 are considered further in the section on the balance of payments. Movements in *stocks* over recent years are shown in Chart 1 (panel i). The behaviour of the stock cycle in 1978-79 was closely related to the movements in farm product and, with the qualification below, the trade balance. A turnaround from decumulation to accumulation began in 1978. The strong growth in farm stocks was primarily responsible for the stock surge in the first half of 1978-79, although non-farm stock accumulation also made a positive contribution to product growth in the same period. A much reduced rate of farm stock accumulation and, as presently estimated, non-farm stock accumulation as well, depressed growth significantly in the second half of the year. The close connection between domestic final demand, imports and non-farm stocks, traced in previous issues of this Statement, is shown in the present estimates as uncharacteristically loose in the second half of 1978-79, particularly in the June quarter. In that quarter a sharp increase in imports and a fall in domestic final expenditure are accompanied by a rundown in non-farm stocks (and a fall in the statistical discrepancy). Even making allowance for possible consequences of oil industry stoppages in New South Wales this constellation of movements is implausible. Part of the seeming inconsistency may be a result of timing discrepancies which have served to record March quarter events in June, but even taking the half-year as a whole there is a similar, albeit less marked, inconsistency; any timing problems may well flow over into 1979-80. Growth rates in the farm and non-farm components of GDP diverged in 1978-79. *Farm product* expanded sharply with growth for the year as a whole reaching a preliminarily estimated 36 per cent. Favourable seasonal conditions led to bumper cereal crops, notably of wheat where output was 24 per cent greater than the previous record crop of 1968-69. With a moderate increase in wheat prices, the gross value of wheat production in 1978-79 was 129 per cent greater than in the previous year. The value of livestock slaughterings rose by 57 per cent, reflecting rapid price escalation which more than offset reduced yardings of cattle for slaughter. Wool production was 122 per cent greater in value than in the previous year; increased demand lifted prices notwithstanding increased sales from Wool Corporation stocks. Growth in *non-farm product* was for obvious reasons less spectacular. For 1978-79 the present estimates show an increase of 2.8 per cent for the year as a whole; over the year to the June quarter 1979, the increase is currently estimated at 2.0 per cent. For the reasons discussed above it seems necessary to attach considerable qualifications to these estimates; these can be summarised by reference to the quarterly changes shown in Table 4. While the estimated growth rates for the quarters in 1978-79 at the time of the previous statistical release (March quarter) seemed on the high side, the growth rate for the year ended March, some 4 per cent, appeared broadly consistent with the other economic indicators and intelligence to hand. The pattern of activity gathering pace as the year progressed, with signs of some easing back during the March quarter, also seemed consistent with the ensemble of indicators. However, while some slowing in the last part of the year would have been expected, the within-year pattern of change as now estimated (Table 4) is implausible. Past experience suggests that these initial estimates of non-farm product growth could well be subsequently revised upwards; the latest estimates of nonfarm product growth for the years 1970-71 to 1977-78 are higher on average than the estimates as first published by some 0.9 percentage points (see Table 1). The strong influence of developments in the farm sector lifted the estimated growth in total *gross domestic product* in 1978-79 to 4.7 per cent; growth over the year was slightly lower at 4.1 per cent. {:#subdebate-92-2} #### Labour Market As noted in Statement No. 2 last year, *unemployment* appeared to stabilise in the closing months of 1977-78. That stability continued over the course of 1978-79. The year also, saw sustained, albeit modest, growth in *employment* and a sharp rise in recorded factory overtime hours worked. The modest employment increases reflect the fact that although non-farm output growth in 1978-79 is judged to have been significantly faster than in 1977-78, it continued to derive mainly from increases in, and increased utilisation of, the capital stock rather than from employers taking on more labour. Chart 4 depicts the recent experience as currently recorded. Table 5 shows the major labour market indicators for recent annual and half-yearly periods. The recorded figures suggest a significant decline in the *participation rate* in the latest year, following more moderate falls from the 1975-76 peak in the previous two years. This decline moderated the growth in the labour force and this, along with the pick-up in employment, combined to produce relative stability in the level of unemployment. The sustained downward movement of the participation rate presumably reflects withdrawal from the workforce by those who, while offering for jobs under more buoyant labour market conditions, do not feel a need to seek work under conditions where it is much harder to find (the so-called 'discouraged-worker effect'). Interpretation of labour market developments continues to be difficult. While it is appropriate to focus on ABS labour force survey estimates, inconsistencies between those estimates and other statistical series underline the need for caution in assessing the present state of the labour market. Labour force survey estimates point to a rise in total employment of about 27 000, or 0.4 per cent, for 1978-79 as a whole, but with the increase over the year to the June quarter 1979 being somewhat faster at 0.9 per cent. The survey indicates that the growth in employment was heavily concentrated among employers and self-employed rather than wage and salary earners; during the year to the June quarter the number of employers and self-employed (seasonally unadjusted) rose by 4.7 per cent. The modest growth in wage and salary earner employment according to the survey (0.3 per cent during the year to the June quarter) stands in some contrast to the civilian employees series (based on payroll tax returns), which recorded a seasonally unadjusted rise of 1.4 per cent over the year to May 1979. A particularly large inconsistency is that while the civilian employees series shows an increase of 2.5 per cent over the year to end-May in the number of female employees, labour force estimates of female wage and salary earners show a fall of 0.2 per cent over the year to the June quarter (both seasonally unadjusted ) . There is also some, though more readily explicable, inconsistency between the major series measuring unemployment. While the ABS estimates point to little change in unemployment over the course of 1978-79, the number of registrants with the CES appears to have risen over the year by around 24 000. However, this increase does not necessarily represent a change in the level of unemployment; the ABS survey shows that a rising proportion of the unemployed was registering with the CES. Taking the various figures at face value, several other labour market developments of interest occurred in 1978-79. According to the labour force survey, part-time employment continued to expand firmly and accounted for the great bulk of the rise in employment during the year to the June quarter. In contrast with experience in other recent years, female employment was much weaker than male; while female part-time employment rose by 22 700, during the year to the June quarter, this was more than offset by a fall in female full-time jobs. On a different aspect, the civilian employees series indicates that private sector and public sector employment moved somewhat differently. Following persistent declines since the onset of the recession, employment in the private sector (including, notably, manufacturing) picked up during 1978-79, whereas growth in government employment slowed considerably, especially in the second half of the year. {:#subdebate-92-3} #### Prices The clear downward trend in the rate of inflation that had been established in the past several years was interrupted in 1978-79. This largely, though not wholly, reflected factors originating outside Australia. First, in order to encourage oil conservation and the development of alternative energy sources, the Government decided at the time of last year's Budget to proceed immediately to have domestic crude oil priced to consumers at full import parity. This led to an immediate jump in petroleum product prices within Australia. Subsequent large increases in the international price of oil, passed on similarly in full, have meant that petroleum product prices have continued to boost movements in domestic prices. Secondly, the strong demand for beef in the United States (and other overseas markets) throughout 1978-79, coupled with supply limitations in Australia, led to a steep increase in prices of Australian beef - with other meats, such as mutton and lamb, moving strongly upwards also as domestic consumer demand switched from beef to cheaper alternatives. Finally, prices of a wide range of internationally-traded raw materials, including wool and most of the metals, rose significantly over the year under the pressure of growing international demand. The important contribution of food prices to recent movements in consumer prices is evident from the fact that, while the CPI rose by 8.8 per cent over the course of 1978-79, the rise excluding food prices was 7.3 per cent, which was actually a little smaller than over 1977-78. Movements in the main price indexes in recent years and in the latest three half-years are set out in Table 6. The annual movements disguise the acceleration occurring in a number of the indexes over the course of 1978-79; this is more clearly brought out in the half-yearly movements. The implicit deflator for private consumption rose by 9.5 per cent over the course of 1978-79, compared with 8.1 per cent over 1977-78. Compositional differences, and the fact that the changed health care arrangements announced in last year's Budget had little effect on the consumption deflator, explain why that deflator recorded a larger rise over 1978-79 than did the CPI. The recent improvement in the terms of trade and the strengthening in world demand for Australia's traditional exports are reflected in foreign trade and rural price indexes. Over the course of 1978-79 the implicit deflator for exports rose by 18.6 per cent and that for imports by 13.1 per cent; over the same period the currently estimated implicit deflator for farm product rose by no less than 30 per cent. {:#subdebate-92-4} #### Incomes The rate of increase in wages and earnings slowed in 1978-79. *Average weekly earnings* (male units basis) rose by 7.7 per cent for the year as a whole, compared with 9.9 per cent for 1977-78; the increase over the course of 1978-79 was 7.6 per cent. The changed timing of National Wage Case decisions accounts for part of this observed slowing. With the switch to six-monthly hearings, earnings in 1978-79 were affected by only two National Wage Case decisions - those announced on 7 June 1978 and 12 December 1978 - involving in effect adjustment for only three quarters' increase in the CPI. These decisions, which granted increases totalling 5.3 per cent, were based on full indexation. The 3.2 per cent partial indexation decision handed down on 27 June this year did not, of course, affect earnings in 1978-79. While National Wage Case decisions continued in 1978-79 to be the main influence on the growth in earnings, for the first time since 1974-75 average weekly earnings increased significantly faster than *average minimum male awards.* Table 7 sets out the relevant details. Growth in overtime does not appear to have been a major cause of the difference between the growth in award rates and the growth in earnings in 1978-79: while average overtime hours worked in larger private factories increased significantly over the course of 1978-79, this does not appear to have been an economy-wide phenomenon. Over the year to the March quarter 1979 average weekly earnings rose by 9.2 per cent, much the same as the 9.1 per cent increase in ordinary time earnings. Rather, the difference appears to have been largely attributable to the reappearance of 'earnings drift'. There is also evidence of wage increases occurring on so-called 'work value' grounds which while formally arranged within the indexation guidelines have been clearly outside their spirit. The ability of particular workers to secure earnings growth in excess of National Wage Case decisions may in part relate to the fact that, for some, real wages are now more in line with labour productivity than they were - a development still, however, clearly lacking in the case of young persons and (in some cases the same thing) the unskilled. Table 8 presents information on real award wages and earnings. Male award wages deflated by the private consumption deflator (which rose by 9.0 per cent for the year as a whole) fell by 2.4 per cent in 1978-79 after being broadly constant in the previous year. The changed timing of National Wage Case decisions and the fact that the rate of inflation ceased to decelerate during 1978-79 served to depress real awards. Although nominal earnings (male units basis) increased significantly faster than awards, they too were affected by the same influences, with the result that earnings deflated by the private consumption deflator also declined in 1978-79. Reflecting the slower growth of the deflators for construction and public sector expenditures, and also being less affected by excise taxes, the non-farm product deflator rose more slowly than the consumption deflator, by 7.2 per cent, in 1978-79. Deflated by this measure, which gives a better guide to the real cost of wages to employers, the fall in real awards in 1978-79 is reduced to 0.8 per cent and real earnings show a rise of 0.5 per cent. The near stability of real earnings in 1978-79 meant that the productivity growth occurring during the year contributed to a further correction of the imbalance between real labour costs and productivity with which the year commenced. As the index in Table 9 shows, *real unit labour costs* for the non-farm sector fell from an average of 111 in 1974-75 (the base of 100 is the average for 1966-67 to 1972-73) to 106 in 1978-79. Any upward revision to non-farm product growth in 1978-79 which, as indicated earlier, seems likely would lower this index of real unit labour costs. The latest national accounts estimates indicate that the *gross operating surplus* of companies rose by only 3.6 per cent in 1978-79, with the increase over the course of the year even lower at 1.3 per cent. Such low growth is in contrast to the widely reported profit performances of a number of major companies and the generally encouraging tone of the main qualitative surveys of business performance. In the past the gross operating surplus of companies has been one of the items of the national accounts most prone to substantial revision, and it would not be at all surprising if company operating surplus eventually proves to have grown more rapidly in 1978-79 than presently estimated. Upward revision to the gross operating surplus of companies for 1978-79 would lead to an upward revision to the gross domestic product figures. Statement No. 2 last year provided information on the sharp imbalance in factor shares which developed in 1973 and 1974 and on the progress that had been made in correcting that imbalance. Given the uncertainty currently attached to the most recent national accounts estimates, particularly those for gross operating surplus of companies, it seems unrealistic to attempt detailed income share analysis at the present time. Chart 5 does, however, show the shares in non-farm product at factor cost of wages, salaries and supplements and gross operating surplus of corporate trading and financial enterprises as presently estimated. Boosted by the growth in farm incomes, the gross operating surplus of unincorporated enterprises seems to have risen by some 30 per cent in 1978-79. In line with the rural boom, farm income jumped by over 120 per cent in 1978-79 and the share of farm income in gross domestic product at factor cost rose from 2.5 per cent to 4.9 per cent. While assets with marketing organisations increased significantly, realised farm income more than doubled in 1978-79. {:#subdebate-92-5} #### Monetary Conditions Growth in the broadly denned *volume of money* (M3) during 1978-79 was 11.8 per cent, reversing the steady deceleration of the previous three financial years. Factors which contributed to this reversal included a sharp reduction in demand for government securities; large Rural Credits advances to the Australian Wheat Board during the March quarter which were only partially repaid during the balance of the year; and a pronounced turnaround in private sector foreign exchange transactions between the first and second halves of the year (discussed in the section on balance of payments developments). Policy measures to contain monetary growth were taken in the second half of the year. The major factors in the formation of movements in the volume of money are set out in Table 10. For the year as a whole, the Commonwealth's domestic budget transactions were again the dominant factor in changes in private sector holdings of liquid assets and government securities (LGS). Because of a welcome strengthening of the balance of payments, private sector foreign exchange transactions provided almost a $1 billion smaller offset than in the previous year (S254 million in 1978-79 compared with $1202 million in 1977-78). Although the net addition to private sector LGS holdings arising from the domestic budget deficit and from private sector foreign exchange transactions was some S850 million above that of the previous year, the total increase in such holdings was about the same as in 1977-78. This reflected calls to the Statutory Reserve Deposit (SRD) accounts of the major trading banks, contrasted with sizeable releases in the previous year. The task of financing the Commonwealth Budget deficit in 1977-78 and the early months of 1978-79 was greatly assisted by public expectations of a continuing wind-down in inflation and nominal interest rates. However, beginning about November 1978, a number of developments largely outside the control of the authorities caused interest rate expectations to be fairly drastically revised. Those included sharp increases in interest rates in major world financial centres; indications of a worsening global inflation trend, partly associated with commodity prices, which were also reflected domestically in Australia; the full indexation National Wage Case award in December 1978; and gradually developing awareness of overruns on the Budget deficit and monetary growth projection. After a surge in the non-bank private sector's holdings of Commonwealth Government securities in the September quarter (notably from the record August Commonwealth cash loan which closed shortly after the 1978-79 Budget was brought down), there was a decline of some S250 million in such holdings in the December quarter. With secondary market yields having risen noticeably, official yields on Commonwealth Government securities were increased somewhat in the February conversion loan. Continued declines in bond holdings in the March quarter largely offset some increase in holdings of Treasury Notes to yield net non-bank take-up of only S33 million in that quarter. A series of monetary measures was implemented in the second half of the year with the objective of redressing the excessive growth in the monetary aggregates. In April yields were increased on Treasury Notes, Australian Savings Bonds and local and semi-government authority securities. Official yields on Commonwealth Government securities were again increased in the May conversion loan and yields were subsequently allowed to rise further in open market operations by the Reserve Bank. *De facto* tender and 'tap' operations to facilitate the sale of Treasury Notes and Commonwealth bonds respectively were undertaken by the Bank. Calls totalling two percentage points were made to SRD accounts of the major trading banks. Arrangements were made for refinancing, in two successive tranches, $455 million of Reserve Bank advances to the Australian Wheat Board by sales of commercial bills to the public. On 24 May, the Treasurer announced comprehensive measures to reduce the prospective Commonwealth Budget deficit in 1979-80. With higher yields on government securities and some restoration of investors' confidence following the Government's policy actions, sales of securities picked up in the closing months of the financial year. Non-bank take-up of Commonwealth Government securities in 1978-79 was equivalent to about 32 per cent of the domestic deficit, compared with 53 per cent in 1977-78 and 59 per cent in 1976-77: Non-bank take-up was mainly concentrated in Australian Savings Bonds and Treasury Notes with a relatively small contribution from Commonwealth bonds, especially longer-dated maturities. Investors' preference for Treasury Notes over bonds reflected both the importance placed by investors, in the light of revised expectations, on the lower risk of capital loss on shorter-term securities and the improved relative yields on Treasury Notes during the seasonal liquidity upswing. Further material on Budget deficit financing transactions is contained in Budget Statement No. 5 (see also Table 11). Despite the full implementation of quarterly company tax collections for the first time in 1978-79, there was again a large seasonal reflux of funds to the Commonwealth in the June quarter. This was handled comfortably without ameliorating SRD action, despite the heavy sales of commercial bills by the Australian Wheat Board over the period; seasonal increases in sensitive private short-term interest rates were moderate. Heavy purchases of Treasury Notes earlier in the year were available to meet seasonal funds requirements and in any case, as a result of LGS asset growth, the system as a whole was quite liquid. Strong deposit intakes by major trading banks allowed *advances outstanding* to grow by 12 per cent during 1978-79, despite transfer of funds to SRD accounts. Quantitative lending guidance was directed towards restraining the increase in advances outstanding. There was strong growth in lending to the rural sector. This partly reflected the increase in capital spending typically associated with an improvement in farm income; a further contributing factor was the commencement of operations of the Primary Industry Bank of Australia, which offers long-term finance to primary producers at concessional rates of interest. *Savings bank deposits* increased by 10 per cent over the course of 1978-79. A pick-up of growth in deposits in the second half of the year partly reflected a faltering in investor confidence in certain non-bank financial intermediaries. *Loans outstanding* increased at a faster rate (14 per cent) than deposits, facilitated by a further reduction in the savings bank prescribed asset ratio in August 1978 and continued adjustment to the previous reduction in the ratio. The percentage increase in holdings of local and semi-government securities was about the same as in the previous year. *Housing loans outstanding* of savings banks grew over 1978-79 by 15 per cent and those of permanent building societies by 20 per cent, a faster pace of growth than for most other lending aggregates but slightly slower than in the previous year. Finance approvals by major mortgage lenders of $5443 million were 21 per cent higher in value and 11 per cent higher in number than in 1977-78. The rate of approvals was especially strong in the first half of the year but steadied in the second half, partly the result of a seasonal slowing in deposits growth and partly because of a temporary loss of funds experienced by NSW permanent building societies in March. Growth in *finance company borrowing,* at about 11 per cent, was relatively subdued for the second consecutive year. This was due to generally patchy, although improving, demand- for finance, a deterioration in the competitiveness of finance company debentures in the second half of the year, and repercussions of the financial difficulties of two major finance companies with substantial property portfolios. Wider measures of the volume of money, especially those which include permanent building society borrowings, again showed faster growth than M3; so also did measures of domestic credit expansion. The narrow definition of money, Ml, also increased more rapidly than M3. Monetary aggregates tended to understate the build-up of private sector liquidity over the year because of the concentration of non-bank take-up of Commonwealth Government securities in relatively liquid forms (Treasury Notes and Australian Savings Bonds); that is, the increment to government debt during the year was of a kind that afforded considerable potential for 'monetisation'. This needs to be seen against the background of the historically high proportion of government debt in longer-term form at the beginning of the year, reflecting heightened appetites for longer-dated bonds in the previous year. As in the case of detailed income share analysis, reservations about currently available statistics make it unrealistic to update at this stage the comprehensive series on sectoral borrowing and lending introduced in this Statement last year. Important developments in sectoral funds flows do. however, seem to have taken place during the year and an attempt is made below - subject to the caveats above - to indicate some of them. *Total public authority borrowing* increased further from the high level of earlier years, with increased deficits for all levels of government; here the information base is relatively sound. Overseas borrowing by the Commonwealth in support of international reserves was reduced somewhat from the high level of 1977-78; in line with a much stronger balance of payments, the reduction was concentrated in the second half of the year. Public sector borrowing requirements outside the Commonwealth Budget area were met by increased borrowings under approved Loan Council programs, including initial overseas borrowings under the infrastructure' program. Savings banks were again major subscribers to local and semi-government loans. It would appear that net lending by the household (including unincorporated enterprises) sector, already very high, increased quite strongly in 1978-79. Disposable income grew sharply; with farm income greatly increased, the saving ratio rose, although it remained below the 1974-75 peak; fixed capital expenditure by households increased modestly; and there was apparently little increase in non-farm stocks. The continuation of very large surpluses in the household sector has afforded considerable scope for direct sales of securities to this sector to finance the public sector deficit. Until the final few months of the financial year, however, sales of Australian Savings Bonds (the instrument particularly directed to the household sector) were relatively modest, reflecting the terms on which they were offered. In the absence of well-based information on the gross operating surplus of companies for 1978-79 it is particularly difficult to assess developments in the *corporate sector's borrowing requirement* over the past year. Growth in investment (notably in plant and equipment and some stock accumulation) may have run a little ahead of profit growth in 1978-79; if so, borrowing by the corporate sector from external sources may have increased from the previous year. Various changes to interest rates during the latter part of 1978-79 (Table 12) reflected a response to changing conditions in financial markets. Altered marketing arrangements for Commonwealth Government securities, which have been approved by the Loan Council, are to be implemented during 1979-80. These changes will help in attuning rates more closely to market conditions and enable more effective control over the volume of securities sold to the public. As shown in Table 12, interest rates on Commonwealth Government securities declined in the first half of the year but increased progressively during the second half. The yields on local and semi-government securities moved broadly in step with yields on Commonwealth Government securities. For the most part the authorities concerned completed their borrowing programs, although the year was not without difficulties for them. There was relatively weak demand for their longer-term fixed interest securities on which investors feared capital losses and with which investors' portfolios were in any case generally well stocked from previous periods. However, innovative marketing by some borrowing authorities appeared to help fund-raising. Toward the end of the year some authorities experienced difficulties in completing their borrowing programs when yields on their securities briefly lost touch with market conditions. Borrowing and lending rates by banks and permanent building societies were generally adjusted downwards by about half a percentage point in December and January. There were subsequent upward adjustments to permanent building society rates in the Australian Capital Territory and in term deposit rates in New South Wales; these rates had previously been towards the lower end of the range of rates prevailing across Australia. Finance company debenture rates also fell in the first half of the year, but were later increased when they became uncompetitive with other rates. The *income velocity of money* (M3) has tended to grow over the long term as a result of more efficient financial practices. Velocity increased by about 1 per cent over 1978-79. {:#subdebate-92-6} #### Balance of Payments In 1978-79 there was an overall *balance of payments deficit of* S131 million compared with a deficit of S542 million in the previous year. While a reduced trade surplus and increased net invisible payments led to an increased current account deficit, this was more than offset by larger net apparent capital inflows than in 1977-78. These annual figures do not reveal the full strengthening of the balance of payments which occurred during the course of the year. A reduction in the current account deficit combined with a pick-up in net apparent private capital inflow contributed to a balance of payment surplus of S171 million in the second half of the year in contrast to a deficit of $302 million in the first half. The turnaround in total private sector external transactions was even more marked; they swung from a deficit of $639 million in the first half to a surplus of $385 million in the second half (Table 13). The turnaround in *private sector external transactions* in the second half of the year enabled the Commonwealth to reduce the level of overseas borrowing needed to maintain international reserves. Gross Commonwealth overseas borrowing declined from $1030 million in the first half of 1978-79 to $527 million in the second half. Moreover, in the final quarter of the year the Reserve Bank reduced its indebtedness to the Bank for International Settlements by SUS150 million. At the end" of 1978-79 Australia's international reserves stood at S3885 million, some $660 million higher than at the beginning of the year. This rise was entirely attributable to increases in the market value of Australia's official gold holdings and to other valuation effects; there was a small loss of reserves from balance of payments transactions. The decline in the *current account deficit* in the second half of 1978-79 reflected a turnaround in the trade account from a small deficit in the first half of the year to a sizeable surplus in the second half. The first-half deficit was largely attributable to shorter-term influences which masked to some extent the steady improvement in Australia's external position flowing from policies to reduce inflation and improve the competitive position of domestic industries. A continuation of the recovery in Australia's terms of trade (which had emerged in the second half of 1977-78) also helped to improve the trade account in 1978-79 (see Chart 6). A sharp improvement in *rural exports* played an important part in this turnaround. In the first half of the year rural export volumes declined, largely as a result of lower wheat shipments from the drought-affected 1977-78 crop. A strong rise in prices of rural exports (mainly beef) offset this decline in volume so that the total value of rural exports increased moderately. In the second half of the year these higher prices were maintained and rural volumes increased sharply as the record 1978-79 wheat harvest began to be shipped. For the financial year as a whole the value of rural exports was 16 per cent greater than in 1977-78. Growth in *non-rural exports* was also rapid (17 per cent) in 1978-79, especially in the second half of the year. Non-rural export volumes declined in the September quarter, largely as a result of cut-backs to iron ore shipments and the effects of industrial disputes on coal shipments. A steady rise in volumes thereafter coupled with increasing prices (particularly for non-ferrous metals and iron and steel) led to a large increase in the value of non-rural exports. The strong rise in the volume of non-rural exports is an indication of Australia's enhanced international competitiveness. This is especially apparent in the case of manufactured exports. Table 14 shows movements in the value of manufactured exports at current and constant prices (seasonally unadjusted) since 1974-75. After a fall in 1975-76 there has been a recovery in manufactured exports with particularly strong growth in both volumes and values in 1978-79. It is estimated that the volume of manufactured exports increased by 16 per cent to reach a level 14 per cent higher than the previous peak recorded in 1974-75. Australia's *import* bill increased by 21 per cent in 1978-79 despite a marginal fall in oil imports. This strong growth appears to have largely reflected the arrival of capital goods ordered to take advantage of the phasing arrangements for the investment allowance. Imports of machinery and transport equipment increased by 38 per cent in 1978-79 as a whole; a bunching of deliveries earlier in the year contributed to the sharp slowdown in import volumes during the second half. With steady growth in import prices - reflecting in part the gradual depreciation of the Australian dollar in the early part of the year and accelerating fuel prices - the total value of imports, however, increased somewhat in the second half of the year. For the year as a whole price increases accounted for about half the rise in the total value of imports. The net *invisibles* deficit continued to grow in 1978-79 at about the same rate as the economy generally (with freight and debt service charges showing the most rapid growth). In the second half of the year, the trade surplus ($715 million) was sufficient to reduce the *current account* deficit to SI 327 million from its level of $1830 million in the first half. This improvement in the current account was accompanied by a marked increase in net apparent *private capital inflow* towards the end of the year. The net inflow of private capital across the exchanges (ie excluding undistributed income and marketing authorities) had been running at moderate levels early iri the year but virtually ceased late in 1978 as a result of strong growth in domestic liquidity, increases in overseas interest rates relative to those in Australia, and uncertainty about the domestic outlook for inflation. Short-term trade credit effects of the improvement in the trade balance may also have played a role. Interest rate adjustments in the second half of the year and fiscal policy actions announced in May undoubtedly contributed to the significant pick-up in net apparent private capital inflow in the closing months of the year. The net inflow of private capital in 1978-79 included an amount of $143 million borrowed by State semi-government authorities for infrastructure financing purposes under the supplementary borrowing program approved by the Loan Council in November 1978. Such borrowings, unlike those by the Commonwealth Government, add to private sector liquidity. {:#subdebate-92-7} #### World Economic Developments Developments in the world economy during the last year presented a very mixed picture. Overall there was continued recovery from the recession of 1974-75 together with some improvement in international payments imbalances. However, an intensification of inflationary pressure underlined the difficulty the major industrial countries face in achieving sustainable growth in output without adding to a rate of inflation that has remained high by historical standards. More recently this problem has been exacerbated by rising commodity prices, particularly the sharp increase in the price of oil. For the OECD area as a whole, there was some acceleration, to an annual rate of around 4 per cent, in real GDP growth in the second half of 1978. While growth in many of the major countries appears to have continued firmly during the first half of 1979, the overall rate of growth has moderated due to a falling off in activity in the United States. The level of world activity was temporarily boosted in 1978 by strong growth in liquidity in a number of the major countries and fiscal stimulus, particularly in Japan and West Germany. In most major countries, private consumption expenditure grew strongly in the second half of 1978 and, with improving business profitability, there was also a significant upturn in private non-residential investment for the first time in this recovery phase. Before the recent increase in oil prices there had been a considerable strengthening in the OECD current account position, resulting in an overall surplus in the second half of 1978. The impact of the recent increase in oil prices on the OECD current account will depend importantly on the speed with which the OPEC countries spend their increased oil revenues. In any case, a substantial current account deficit for the OECD area as a whole is likely to re-emerge in the short term. More important for the stability of the world financial system has been the strengthening in the US current account following a peak deficit of around $US22 billion (annual rate) in the first half of 1978. This improvement did not come fast enough to avert a degree of turmoil in foreign exchange markets and a sharp depreciation in the value of the US dollar against most of the major currencies - a depreciation that was not brought under control until November 1978. This experience demonstrated, if any further demonstration had been necessary, that a system of floating exchange rates does not offer any solution to external imbalances when those imbalances reflect inappropriate domestic policies. While there was some progress in reducing rates of inflation in a number of the major industrial countries in the period after 1974, this process had come to a clear halt by the end of 1978. The deterioration in price performance during the first half of 1979 reflected more than the sharp rise in oil prices; some non-oil commodity prices also rose strongly and there was a resurgence of demand pressures in some countries and wage cost pressures in many. The direct effect of the increase in the price of oil since the end of 1978 could add 1-1 *i* percentage points to the overall level of prices in the major industrial countries. Not only is the immediate outlook for a higher rate of inflation in most countries but the inflation prospect is also more uncertain than for some time. Australia has not, of course, been insulated from these developments. The overall growth in world demand together with a marked improvement in our competitive position has, as noted earlier, been reflected in a strong recovery in Australian exports. This recovery has been reinforced by record growth in rural output and the resurgence in commodity prices, with most export categories recording good gains. While the increase in commodity prices (particularly food) has contributed importantly to the strengthened balance of payments position, these higher prices together with the oil situation have been important influences on the trend in Australia's internal costs and prices over the past year. In terms of growth in economic activity, Australia has been faring relatively well. Private investment has picked up in Australia and productivity growth has been relatively high (although industrial unrest has recently increased sharply). It is noteworthy that the stance of fiscal and monetary policies around the world, which with few exceptions was expansionary or accommodating throughout 1978, has become more generally restrictive recently. Following strong growth in world liquidity in 1978, a number of industrial countries (including the United States, Japan, Canada, Germany and Britain and several smaller European countries) have taken action to tighten monetary policy. Fiscal policy has also become more cautious in a number of countries. The acceleration of inflation (including but also preceding the impact of higher oil prices) has been the catalyst in this policy turnaround. This has been occurring at a time when economic activity in the United States was levelling off or even beginning to fall. It is generally agreed that a 'cooling-off' period in the United States is required to achieve a reduction in the rate of inflation and ward of! the danger of an even deeper recession somewhat later; none the less this conjunction of events has added to present uncertainties about prospective developments in the world economy. As a consequence of developments in the Middle East, there was concern early in 1979 that the availability of oil could provide a constraint on growth in the period immediately ahead. However, the evident decline in economic activity in the United States, together with the impact of conservation measures which many countries have adopted and increased output of oil by a number of producers have contributed to an improved supply/demand balance more recently. There is growing recognition that further growth in output and employment will depend importantly on bringing inflation under control. This recognition was highlighted in the communique issued on 14 June this year following the OECD Ministerial Council Meeting: {: type="i" start="1"} 0. the most obdurate obstacle to faster growth and more jobs is the continuing high rate of inflation in many member countries, and the risk that it may accelerate.' Apart from dealing with the general problem of inflation, the world's economies will be facing a difficult period of adjustment to the energy situation in the period ahead. As was also noted by the OECD Ministers, 'economic and energy policies have become inseparable'. Accordingly, they recommended: Higher oil prices should be passed on in an appropriate manner to energy users in order to encourage conservation and the development of alternative energy sources. Member countries that have not already done so should raise the price of domestically produced oil to the world level as soon as possible.' The outlook for the world economy and its implications for Australia are discussed further in Parts II and III. Part II Policy Review {:#subdebate-92-8} #### Background For some years now the Australian economy has been affected by fundamental distortions which have severely inhibited its performance. To begin with, real labour costs have been out of line with productivity, with the consequence in the labour market of excess supply far greater, on a sustained basis, than at any earlier time in the post-war period. The gross return to private investment has been greatly reduced, another manifestation of the factor price imbalance, with a consequential question mark over the long-term expansion of the private sector. Until recently, Australia's international competitiveness had been severely eroded, constraining activity and investment in export and import-competing industries. Expenditure by the public sector has been significantly in excess of receipts and the greatly-swollen public sector borrowing requirement has led to severe strains in financial markets. Fundamentally, and contributing to all of the foregoing, has been an inflation performance which, while improving considerably on that of some earlier years, has remained basically unsatisfactory; that has heightened uncertainty, inhibited private decision-making and depressed the confidence of consumers and investors both domestic and overseas. Indicative of the nature of our changed economic situation is the fact that, while growth in GDP at constant prices has averaged 3 per cent a year since 1974-75, growth in total employment has averaged only 0.6 per cent a year. In consequence, unemployment has remained at unacceptably high levels. Australia's product growth performance has compared favourably with other countries over recent years yet, relatively, unemployment has been higher. Policy has been directed to correcting the distortions which have been preventing sustained high-employment economic growth. Accordingly, the Government has sought to restrain Commonwealth Budget expenditures, those of the public sector as a whole (to the extent that it is within its power to do so) and its own Budget deficit. Ancillary to this, it has endeavoured to fund its deficit in a manner that ensures moderation in the growth of the monetary aggregates. One of the conclusions to be drawn from economic developments in recent years is that such policies of fiscal and monetary restraint can facilitate moderate sustainable growth in the private sector and hence in the total economy. But the past year also provided a strong reminder that, in the face of unforeseen developments, policy may have to run very hard to stay in the same place. A number of the main economic policy indicators for recent years are set out in Table 15. A more detailed review of the conduct of policy follows. {:#subdebate-92-9} #### Fiscal Policy The 1978-79 Budget was framed to continue the thrust of Budget policy in other recent years, being aimed at continued expenditure restraint and a reduced deficit. The view of the relationship between the Budget and the economy on which this approach has been based does not involve a rejection of the standard analysis which traces what are referred to as the multiplier or income/expenditure effects of Budget outlays and receipts. Rather, it is based on the observation that, especially in present circumstances, there are other linkages or channels of influence between the Budget and economic behaviour and activity which must be taken into full account. The Budget (domestic) deficit exerts an important influence upon monetary conditions. An excessive contribution to liquidity from this source leads to excessive expansion of monetary aggregates, weakness in the balance of payments, an uphill battle for monetary policy, or a combination of all three. Past a point, the result, one way or the other, is an increase in the rate of inflation. If the deficit is being financed by borrowing from the (non-bank) private sector, then the exchange of securities for cash (ie acquisition by the private sector of command over future resources in return for giving up command over current resources) is necessarily voluntary. This means first of all that the price (interest rate) must be adequate to induce the exchange. That is, the offsetting of the monetary consequences of high deficits requires higher nominal and, at least in the first instance, real interest rates, and tighter restrictions on private credit flows. That means economic restraints on sectors sensitive to credit conditions - in other words, a bearing down on activities for which borrowing is undertaken, namely, capital formation. Non-inflationary deficit financing, while it may be possible in the short run within reasonable limits, becomes increasingly difficult when there is a continuing succcession of large deficits. Each new deficit adds to the outstanding *stock* of government paper; the public debt in the hands of the private sector builds up. Continuing large volumes of new public sector paper appear increasingly unattractive without a ratcheting up of nominal interest rates. Of course, the deficit arises fundamentally from the high level of public expenditure. That in itself, and particularly when public expenditure increases rapidly, can impair the vitality of the private sector even if it is fully met by taxation. Dependencies are created; entrepreneurship and individual effort are weakened. Because provision of more government services is not readily seen to involve less of something else, the community may come to expect the economy (and governments) to deliver more than it (and they) can. Financing of the elevated expenditures more fully by higher taxation can also have adverse consequences for incentive, tax avoidance, cost-inflation and so on. From this perspective, the 'first best' solution to continuing high deficits would be restraint on expenditure levels. If that in itself does not achieve reductions in the deficit increased taxation is required. Fiscal and monetary policy settings also influence the environment within which wage determination and price setting occur. Wage and price inflation are, in turn, important influences upon consumer and investor confidence and international competitiveness. Moreover, in an economy where behaviour is strongly conditioned by expectations, the effects of the Budget on economic developments through these channels may be brought forward in time and the Budget - and in particular any major divergence in it from what had been generally anticipated - can have strong announcement effects. Economic policy generally has been directed towards establishing the necessary *pre-conditions* for sustainable economic expansion. For fiscal policy that has meant expenditure restraint to limit the expansion of the public sector, to enable taxes to be reduced (or at least to limit any necessary increases) and to contribute to a lower deficit. The impact of public sector transactions on the economy depends also on public sector transactions not covered by the Commonwealth Budget. The Statistician's summary of public sector transactions based on Commonwealth and State budgets and related information estimated the increase in 1978-79 in consolidated outlays of *all public authorities* at 9.1 per cent, the increase in receipts at 10.1 per cent and the deficit at $5.6 billion (compared with $5.4 billion in 1977-78). In the event, both Commonwealth and State and local government sector transactions diverged from those (Budget) estimates. For the Commonwealth Budget, outlays overran the estimate by $175 million or 0.6 per cent, receipts fell short by $490 million or 1.9 per cent and the deficit was $3.5 billion compared with the original estimate of $2.8 billion. The overrun in the Budget deficit in 1978-79 followed a similar large divergence in 1977-78. In both years the major cause was a shortfall in receipts; outlays were in both cases close to Budget estimates. The only element in common between the receipts shortfalls of the two years was the shortfall in customs duty; the relationship between the level of imports and customs duty has been changing in recent years and the ratio of duty to imports was overestimated in both years. For other items, quite different factors were at work in the two years. Detailed comparisons of Budget estimates and outcomes are set out in Statement No. 5 and in the corresponding Statement attached to last year's Budget Speech. In neither year did the major revenue shortfalls stem from shifts in policy during the year (or, for that matter, any systematic misjudgment of economic prospects). That is not to say that the consequent expansions in the deficit did not cause problems for policy; they did, particularly in the form of impact on private sector liquidity, interest rate expectations and expansion of the monetary aggregates (see below). As noted above, public sector transactions affect economic behaviour in various ways: there are income/expenditure effects (effects on the disposable incomes and spending of the various groups in the private sector and on final demands for goods and services by the public sector itself), effects on private sector liquidity and the volume of money, on the price level, on incentives, on expectations, and on investor and consumer confidence. National accounting classifications (see, e.g., Statement No. 1 and Table 4 in Statement No. 6) of Budget transactions provide the starting-point for an examination of income/expenditure effects. The relevant Commonwealth Budget items may be consolidated with those of Commonwealth non-Budget authorities (see Budget Paper No. 10) to produce estimates for *all Commonwealth authorities'* final expenditure. (The notes in Budget Papers Nos 9 and 10 describe some of the differences in treatment between the Budget documents and the national accounts.) A national accounting consolidation for all Commonwealth authorities' final expenditure is shown in Table 16. As there shown, current expenditure, on a deliveries basis, of all Commonwealth authorities expanded strongly in real terms in 1977-78 and 1978-79. However, capital expenditure of all Commonwealth authorities on the same basis declined significantly in 1978-79 in real terms. In total, real net expenditure on goods and services fell by $100 million in 1978-79. Such figures represent only the *direct* impact on final demand of spending by the Commonwealth itself. Commonwealth transfer payments and net advances to other levels of government are very substantial, and they constitute an important source of funds for the recipient sectors which, of course, also make direct expenditures on goods and services. Total public sector outlays on final demand for goods and services (on a national accounts basis) are drawn together in Table 17. (Budget Paper No. 9 relates those figures to other public sector transactions and to national accounting estimates more generally.) The figures in Table 17 indicate that public sector current expenditure continued to expand strongly and made a substantial direct contribution to the increase in aggregate real final demand in 1978-79. Public sector capital expenditure declined somewhat in real terms in 1978-79, the increase in capital expenditure by State and local government authorities not quite offsetting the decline in Commonwealth capital spending. Overall, public sector final demand increased by 2.2 per cent in constant price terms in 1978-79. Tracing the effects of the Budget on the economy through its influence on the disposable incomes and liquidity positions of non-government sectors is less straightforward. Allowance must be made for effects on disposable incomes/ liquidity positions, which are affected by flows both ways, and also for the behaviour of the various sectors given their disposable incomes. Such behaviour is influenced by confidence and expectations factors which depend in no small part on perceptions of the stance of economic policy. Even if attention is limited to income /expenditure effects, the interactions between the Budget and the economy are complex and there are no simple indicators which adequately summarise them. However, it is clear that, notwithstanding the restraint on its own expenditure exercised by the Commonwealth Government, total public sector outlays on goods and services, in real terms, have expanded quite substantially in recent years. Perhaps misjudging the extent of that expansion, some have argued that economic conditions have required even stronger public spending (or lower taxes). More complete assessment of such views must also involve a consideration of the other channels through which the Budget and the public sector as a whole affect the economy, notably the monetary, expectations and inflation linkages. The following sections address the links between the Budget and monetary conditions and between those and external and wage and prices policies. Expectations and inflation linkages are bound up in all of those. {:#subdebate-92-10} #### Monetary Policy Monetary control represents an essential element of the Government's economic strategy. The steady winding back of growth in the monetary aggregates that was achieved from early 1976 to about mid-1978 helped restore more settled financial conditions. It contributed to a period of considerable success in lowering inflation and inflationary expectations which, in turn, allowed significant and widespread reductions in interest rates. The reversal of the downward trend in prices in 1978-79 probably owed only a little to the acceleration of monetary growth which also occurred during the year; there was, however, concern that the latter, unless checked, would lead to a lasting rather than temporary deterioration in price performance. As noted in Part I, the latter months of the financial year saw a variety of measures designed to reduce growth in the monetary aggregates; however, the fairly sharp strengthening of the balance of payments at about that time operated to offset the effectiveness of those measures. Success in reducing the growth in monetary aggregates in the three years prior to 1978-79, despite a continuation of large Commonwealth Budget deficits, was possible primarily because of large bond sales to the public, an outflow of funds through private-sector transactions with the rest of the world and, to a lesser extent, restraints on bank lending. With the strengthening of the balance of payments during 1978-79, it would have been necessary, if money growth was to be contained, for other influences to make a smaller contribution to money formation. In the event, developments in the Budget deficit, bond sales and some other formation factors worked to compound the influence of strengthening private sector foreign exchange transactions in expanding the monetary aggregates. Publicly-announced monetary projections - which have been a feature of policy in recent years - have contributed to a favourable climate of expectations and to a measure of stability in financial markets; this has assisted inflation control and monetary management. The projections have indicated how the major instruments of monetary and fiscal policy have been set within an overall policy stance and in that respect have constituted, in their own right, an important consistency test' for the information of the private sector, both within Australia and overseas. Some developments during 1978-79 - the extremely good rural season and sizeable commodity price increases on world markets - made it not inappropriate, as things turned out, for monetary growth to be somewhat above the 6-8 per cent projection contained in last year's Budget Speech; however, the full extent of the overrun that occurred was unacceptable. Given the monetary outcome in the latter part of 1978-79 and recent and prospective wage and price developments, it is especially important for the antiinflationary stance of policy to be reaffirmed. The presentation of an appropriate and achievable monetary projection is undoubtedly an important element of that. There is a number of factors which have led to the presentation of monetary growth ranges as *conditional projections* rather than *rigid M3 targets.* These factors have principally reflected, on the one hand, what was judged to be feasible given the potential variability of instruments and, on the other hand, the consequences for ultimate economic objectives of attempting to attain rigid M3 targets. Relevant considerations include the following. {: type="a" start="a"} 0. Any given rate of M3 growth achieved via different mixes of money formation factors, e.g., different combinations of domestic credit expansion and outcome on private external account, would be likely to have different - and perhaps markedly different - implications for economic conditions and policy; hence, with the uncertainties attaching to estimates of formation factors, particularly those influenced by an unsettled external environment, rigidity for M3 growth objectives was inappropriate. 1. In the face of some developments (e.g., marked changes in the terms of trade such as occurred in 1978-79), the consequences for the ultimate objectives of policy of a rigid intermediate objective could, and very probably would, be unacceptable. To take an example, if a monetary growth objective is set to achieve a desired balance between bearing down on inflation and allowing expansion of real activity, but then the economy is subjected to a large price increase originating from abroad, rigid adherence to the previously set target would have consequences for real activity which could well go beyond what is acceptable, particularly in the short term. 2. Smooth achievement of short-run monetary growth rates may require large and erratic variations in the instruments of control which would be likely in themselves, despite the achievement of the monetary objective, to impair economic performance. 3. Control directed to *one* monetary aggregate may lead to *offsetting* movements in others - that is, there may be shifts in financing to circumvent the control. Neither controllability of the aggregate in question, nor the stability of relationships between that aggregate, the overall monetary environment and ultimate economic objectives, provide adequate guidance for the setting of precise and rigid aggregate money targets. What has been envisaged for monetary projection ranges is that they should: o demonstrate that the aims of monetary policy fit within a coherent overall policy;. o indicate that greater medium-term 'steadiness' in monetary management is to be pursued but without abandoning an appropriate measure of discretionary responsiveness; and o by providing a 'peg' of stability, attempt to exert a direct influence upon public expectations, which in present-day conditions are central to the inflationary process. At some point, conditional projections and flexible targets come to mean the same thing. Taken beyond a point in the other direction, flexibility undermines the whole intent of projections. In summary, in a still highly uncertain and inflation-ridden world, a monetary projection is a manifest of intent to seek stability; if credible, it can make a useful contribution to the achievement of that goal. The abruptness with which the anti-inflationary stance of monetary policy was disturbed in 1978-79 illustrates the high risk that remains while Budget deficits continue to be large. In particular, a background of persistently large Budget deficits and economic instability generally renders private sector expectations extremely sensitive to adverse economic developments. It is, of course, not just the Budget deficit that bears on monetary conditions; the aggregate deficit of the public sector (its overall borrowing requirement) is also of great importance. Within adequately restrained growth of the monetary aggregates, the scope for private financial institutions to meet loan applications from *private* sector borrowers depends on the *total* financing requirements of the public sector, including local and semi-government authority borrowings. The greater these public demands for financial resources, the smaller the scope for financing of private sector activity without producing higher monetary growth, and the greater the upward pressure on official yields if monetary growth is to be contained. In 1978-79, total public sector demand for borrowed funds was again very large, and there was a marked weakening in investors' appetites for public sector paper. In consequence, difficulties in selling both semi-government and Commonwealth securities were pronounced. Developments of the past year - the changing balance of payments and the brittleness' of bond markets - served to exemplify the basic incompatibility, in anything but the short run, between monetary restraint and greatly swollen public sector deficits. The consequences of an unbroken sequence of such deficits are becoming increasingly manifest. {:#subdebate-92-11} #### External Policy Over recent years external policy has been conducted against a background of sizeable current account deficits (around *2i* to 3 per cent of GDP) financed to less than the usual extent by long-term private capital inflow. This stemmed not merely from the subdued state of the world economy, but from the domestic economic distortions which developed in the mid-1970s and which reduced the competitiveness of Australian industries and Australia's attractiveness to foreign capital. Domestic economic policies designed to restrain inflation and generate recovery in the productivity and profitability of Australian industry have therefore been central to balance of payments adjustment. External policies have been designed to support domestic anti-inflationary policies. This has involved an expanded official overseas borrowing program to support the level of external reserves, with the exchange rate taking only part of the adjustment on external account. As is more fully set out in Part I, the continued application of these policies, together with some important changes in overseas markets for Australian commodity exports, showed up in a marked improvement in the balance of payments during 1978-79. That improvement, in its turn, has important implications for policy. In the second half of 1978-79 the balance of payments returned to surplus. A development with more important implications for the conduct of domestic economic policy was the associated re-emergence after February of a surplus on private sector foreign exchange transactions. As already noted, that increases the importance of securing reductions in domestic elements of growth in the monetary aggregates. The recent oil price decisions by the OPEC nations have added a new uncertainty to the outlook for the world economy and Australia's place in it. Even before the recent lift in oil prices, there were indications that inflation was picking up internationally and that the stronger expansion in world activity in the second half of 1978 was unsustainable, particularly in the United States. The rate of growth in activity in the OECD area is already moderating and economic policies in the industrial countries appear to be entering a more cautious phase. Australia will have to adjust to this changing - and possibly less hospitable - external economic environment. As discussed elsewhere in this Statement, the Australian balance of payments will continue to benefit in 1979-80 from last year's record rural output. In addition Australia is one of the few energy exporters among the developed countries and is rich in energy resources. The outlook for the balance of payments therefore remains encouraging. Nevertheless, prospective world developments underline the need for a continuation of the firm anti-inflationary policies of the kind which have been pursued in recent years, the success of which even to date has contributed importantly to the improvement in the competitive position of Australian industry. In these circumstances, there should be further progress towards a stronger private sector balance of payments and, hence, a reduced need for official overseas borrowing. In this changing environment, external policies might need to become more evidently supportive of the thrust against inflation than in the recent past. Policies on Wages and Prices The Commonwealth's powers and influence over wages and prices are largely indirect and its policies in that field are therefore on a different footing from fiscal, monetary and external economic policy. Of course, influence on wages and prices can be exerted in a general way via macro-economic policies, protection policy and so on; but the Government does seek to play a more specific role. Most obvious in this regard is its advocacy before the Conciliation and Arbitration Commission. In that respect, the dominant feature of recent years has been the system of wage indexation, introduced in April 1975. At a time of rampant inflationary expectations and explosive wage pressures, an indexation approach can have appeal as an alternative to draconian measures of demand management. But in the particular context, where real wages had risen to excessive levels at the time of its implementation, there seems little doubt that indexation tended to perpetuate those excessive real wage levels longer than a less fettered system would have done. Of more recent concern has been the potential of the wage indexation system to build shock changes in the price level into wage movements. To quote the most striking current example, to the extent that the recent sharp rise in the international price of oil implies, as it must, some reduction in Australian living standards from what they would otherwise have been (at least in the short term), that reduction will have to be borne in some form by the community at large. Indexing wages for the increase in the price of oil would in effect seek to insulate wage and salary earners from the necessary adjustment process and, if it were to be successful in that objective, compound the fall in living standards of other groups in the community. (In practice, of course, since such indexing would serve to ratchet up inflation even higher, some part of the fall in living standards would in the event still be borne by wage and salary earners.) Because of the implications for activity and employment of the real wage/ productivity imbalance, the Government in National Wage Case hearings before the Conciliation and Arbitration Commission has consistently advocated the awarding of less than full indexation. A partial indexation approach, it has been argued, not only helps to constrain real wage levels but also lowers the general inflation rate and thus assists in strengthening activity and real national income. In the framing of policy there has been an awareness that an excessive level of real wages has necessitated adjustments, one way or another, in the economy and that, while excessive real wages persist, high unemployment will be an inevitable concomitant of that adjustment. The adjustment process could be less or more protracted and the cost in terms of unemployment accordingly less or greater depending on the extent to which centralised wage determination made a contribution to it. This advocacy has met with only limited success: the indexation decisions granted by the Commission since the beginning of 1976 have averaged 80 per cent of full indexation. In the circumstances of decelerating inflation that prevailed for most of the period, and with some non-indexation increases in award wages, most measures indicate that award wages have increased somewhat in real terms since 1975. This degree of containment of average real wage increases over a period of some years might be counted in the eyes of some as something of an achievement; but coming as it did after a period in which three years' normal increases in real earnings were crammed into one, it has fallen far short of the contribution to the rectification of the real wage/productivity imbalance - and hence the unemployment problem - that might have been hoped for from our centralised wage determination system. As set out more fully in last year's Statement, the persistence of excessive real wages has led to a 'capital accumulation' or 'bootstraps' process of adjustment to the real wage/productivity imbalance, with the burden of that necessarily more drawn out process falling disproportionately upon the unemployed. The natural reaction of firms, to offset the rise in the costs of labour, has been to substitute capital for labour input. In turn, this appears to have contributed to a belief held by some that technological change has accelerated and that there have been adverse effects on net employment accompanying such change. In assessing that belief, a distinction needs to be drawn between the effects of technological change, which historically has been an important source of growth in productivity, income and output (and hence employment also), and the effects on employment decisions of high labour costs (which would induce labour-saving investment at *any* given level of technology). In short, there is here a classic instance of faulty analysis of the reasons for one problem (unemployment) leading to equally faulty analysis of another (the effects on employment of technological change). Even though aggregate real wages as measured are now in somewhat better balance with productivity, by historical standards unemployment remains high. In part, this undoubtedly reflects structural imbalances within the total market for labour; that is, wage rates remain too high for certain categories of labour (those who lack qualifications and experience) relative to the productivity of those categories. It is no coincidence that unemployment remains particularly high among the unskilled and juniors. At the same time, the evidence is mounting of emerging shortages of particular categories of skilled labour for which award wages, it is to be presumed, have been held *relatively* too low. Against that background, the structural rigidities of Australia's present wage-fixation arrangements pose real questions for the viability of sustained economic recovery at anything more than a moderate pace. On a broader plane, and noting that the share of profits in income remains historically low, there is a question whether, against the background of high inflation and 'sensitised' inflationary expectations, a higher than historically normal' rate of profitability is required to ensure that capital formation is adequate to sustain real income growth at the rate to which the community still aspires. If the backlog of unemployment which has built up in recent years is to be substantially reduced, it will be essential for real wages and earnings to continue to be restrained to provide firms with a positive incentive to take on more labour. Otherwise, as in the past few years, the burden of real wage adjustment will continue to be borne in an inequitable fashion by the unemployed. In summary, the need for wage restraint remains as important as ever if unemployment - particularly for juniors and the unskilled - is to be reduced. The recent lift in the incidence of industrial disputation does not, however, suggest a willingness among some elements in the community to acknowledge these basic economic realities. But one way or another the realities will effect their influence; the question of course is how long that will take, and what otherwise unnecessary costs will be incurred along the way. {:#subdebate-92-12} #### Policy Achievements and Policy Options: An Overview Since the present economic policy strategy has been applied with a broadly consistent thrust for some years now, it is legitimate to examine its achievements and to consider its continuing appropriateness for the period ahead. Notwithstanding the interruption in 1978-79, the most obvious success for policy has been the reduction in inflation. As already discussed in Part I, the recent upturn in a number of the price indexes has had more to do with international developments, most notably the behaviour of meat prices and a range of international commodity prices, including oil, than with a build-up in inflationary pressures originating from within the Australian economy. The rate of increase of wage rates and earnings continued to slow in 1978-79, though partly because of the 'one off' effect of the change to six-monthly National Wage Case hearings. While success on the inflation side has been the more obvious, it is also clear that considerable progress has been made in righting a number of the other distortions in the economy. A further shift from wages to profits appears to have occurred during 1978-79. Much of this shift would have been due to the change to six-monthly indexation adjustments and the strong recovery in rural incomes, reflected in the rise in the unincorporated enterprises' share of national income, but the corporate sector's share probably also recovered somewhat, although current national accounts estimates do not support this unequivocally. The incorporated and unincorporated sectors' share of national disposable income continued to be below historical averages but the wages share returned closer to normal'. After allowance for taxes and transfers with government, the picture appears to be similar. In short, in 1978-79 there was further correction of the imbalance in real unit labour costs. There has also been a marked improvement in Australia's international competitiveness, arising both from exchange rate adjustments and from the reduction in Australia's domestic inflation rate. While there are major conceptual and other problems in attempting to construct measures of international competitiveness, various unofficial indexes tend to suggest that Australian industry may now be about as competitive as it was in 1 97 1 . Considerably less progress has been made, however, in reducing public sector deficits and borrowing requirements; sizeable financing problems and high debt servicing charges (one of the fastest growing elements in budgetary expenditures) are continuing legacies of that. Such broad measures of the structural well-being of the Australian economy as those outlined above require qualification. Thus, for example, in income share analysis it is difficult to allow adequately for such factors as the higher risk premia that, in all probability, have now been built into required rates of return (at least for some time) in private investment decision-making. Data deficiencies aside, income share analysis can thus provide only a general guide to the appropriateness of current levels of corporate profitability or wage rates. Indexes of real unit labour costs are very dependent on the reliability of the data on which they are based. Since relatively small movements in the indexes are of interest, small errors in the relevant statistical series can be a major problem. Further, aggregative indexes by their very nature reveal nothing about the situation facing different groups of workers. While average productivity is now more in line with average real labour costs it is still the case that large numbers of the workforce, particularly among the young and the unskilled, who are not fortunate enought to have jobs, are heavily penalised by being locked out of employment by existing wage rates. Likewise, aggregate indexes of international competitiveness can show quite different movements depending on their method of derivation and again they provide no information about the position of particular industry groups. Accordingly, conclusions from these broad measures should not be overdrawn. However, the recent behaviour of key economic groups appears to be in conformity with the general picture portrayed by such measures. It is unlikely to be mere coincidence that the phenomenon of wages drift which had been largely absent since 1974-75 reappeared in 1978-79 as average labour productivity was moving back more into line with real wage levels. The recent strength of private non-residential investment is consistent with a private sector which anticipates improved profitability, at least on an after-tax basis. Expanding manufactured exports and significant growth in the output of traditional import-competing industries along with strong growth in investment in mining are all consistent with improved international competitiveness. Bond markets, as already noted, exhibited the sort of disturbance that would be expected from changed inflationary expectations in the face of continued large public borrowing requirements. Overall, the evidence points to private economic activity being less heavily constrained by distortions in relative prices, either in terms of returns to factors or internationally, than it had earlier been. This is not to say that there are no major remaining legacies of the long period of distortion. Large sections of the workforce are still effectively priced out of jobs by the actions of others in maintaining the level of their real wages; and relative wage levels are still excessively constrained by rigidities in the wage determination system. Large areas of industry affected by past relative price distortions clearly remain uncompetitive internationally and are dependent on government support through the regulation of international competition. Further, the share of private investment in total expenditure is still below past levels. Expectations concerning inflation are clearly still highly sensitised and business and consumer confidence is brittle. However, speaking broadly, the private sector now appears better placed than it has been for many years to achieve sustainable economic growth. Given the measure of success which has attended the application of economic policy in these past several years, it might be argued that it is time to apply more 'stimulus' through traditional demand management techniques. Consideration of the inflation prospect should dispel such views as should the recent history of similar ill-advised experiments overseas. With the impact of recent OPEC oil price decisions and other cost increases yet to be fully reflected in domestic final prices, the short-run outlook for prices is not encouraging. While the recent surge in prices by itself should be a temporary phenomenon, there is a danger of it being built into expectations about future rates of inflation and into the wage-price system; overly accommodating monetary conditions for part of 1978-79 may have contributed to the beginnings of such a development. The conclusion must be that, at the present time, there is no responsible alternative to a policy directed towards reassuring the community that the surge in prices which is already evident and which will continue in the early quarters of 1979-80 does *not* herald a new round of accelerating inflation. Belief that the growth in the monetary aggregates would be allowed to continue to accelerate would make it almost a foregone conclusion that recent price movements would be built into future price movements; Australia would then be faced with another round of accelerating inflation, with all the economic dislocation that such a development would imply. The increased uncertainty now associated with developments in the world economy is an additional factor supporting the maintenance of a broad policy of economic restraint. If anything, the international outlook implies that the range of feasible policy options is now even more limited that it was, say, a year ago. Continued application of a policy of restraint will work to ensure that Australia's new-found competitive position is maintained and that, in the event of a downturn in the growth of international trade, Australia will at least be wellplaced to secure a larger share. The implications for Australia of likely developments in the world economy are discussed further in Part III. Paradoxically perhaps, the success that the Commonwealth has achieved in righting a number of the distortions in the economy has not made the task for policy easier. With the balance of payments returning to a more normal position and likely to contribute significantly to the growth of domestic liquidity in 1979-80, the need to reduce the liquidity contribution of the Budget has assumed even greater urgency. It also appears from recent wage behaviour that, with real wages in somewhat better alignment with productivity, at any rate in an aggregative sense, market forces are coming to play a greater role in the setting of money wage movements. Where money wages are to a significant degree being determined on a decentralised basis rather than by centralised institutional arrangements, it is more important than ever that policies, particularly monetary policy as well as policies towards external competition, be appropriate and provide a setting that does not facilitate generalised wage increases and continues to bear down on inflation. Such considerations underlie this Budget. A review of prospective economic developments in 1979-80, as they now appear, is contained in Part III below. Part III The Economic Outlook, 1979-80 {:#subdebate-92-13} #### Background Parts I and II have discussed the background of economic conditions and policy considerations underlying the formulation of this year's Budget. Restraint on Budget outlays and reductions in the deficit have, as in previous years, been central objectives. This year's estimated deficit of $2193 million has been attained by limiting growth in Budget outlays to 9 per cent and increasing revenues by 15 per cent. This compares with the outcome for 1978-79 in which the Budget deficit of $3478 million was the result of growth of 8.4 per cent in outlays accompanied by growth of 8.9 per cent in revenues. The estimates for 1979-80 allow for the Commonwealth Government sector as a whole to maintain broadly the level of current expenditures at their real 1978- 79 level overall, and to show some growth in real capital expenditures. Growth in the latter, which contrasts with a fall in 1978-79, is largely accounted for by Commonwealth public enterprises. Payments to the States and local government from the Commonwealth Budget are estimated to grow by 6.6 per cent this year in nominal terms compared with 4.8 per cent in 1978-79. Combined with increased borrowings and own-account revenues, these payments are expected to support continued real growth in State sector expenditures. Payments of cash benefits by the Commonwealth are budgeted to increase by over 9 per cent. On the revenue side, personal income tax receipts are expected to rise by 18 per cent this year. The Government's decision to suspend tax indexation in 1979- 80 and to apply a standard rate of 33.07 per cent on assessment accounts for 8 percentage points of the growth in estimated personal income tax receipts. The other significant change in the composition of revenues this year is the large rise (70 per cent) in receipts from the levy on domestic crude oil production, estimated to yield $2023 million in 1979-80. It is expected to constitute 7.5 per cent of total taxation receipts in 1979-80 compared with 5.1 per cent in 1978-79. While the revised levy arrangements and the substantial increase in import parity price combine fortuitously to widen the tax base in 1979-80, that will only be a temporary phenomenon as the scheduled phasing of higher shares to producers takes effect (see the appendix to Statement No. 4 for details). Together, the increased revenue from the crude oil levy and the changes in the personal income tax provisions will make a sizeable claim on household incomes this year. The magnitudes of the personal income tax changes in 1978 and 1979 are such as to superimpose quite distinctive within-year patterns on domestic budgetary transactions on top of the normal seasonality. The domestic deficit is estimated to have been some $2500 million (seasonally adjusted, annual rate) in the second half of 1977-78 and $2800 million in the first half of 1978-79, before contracting sharply to about $1700 million in the second half of the year. In the current halfyear it is probably well down from that again but, given the magnitude of the tax reductions after 1 December, it may not contract further during the course of the year. {:#subdebate-92-14} #### Forecasting Assumptions The following assumptions, in addition to those embodied in the Budget estimates, have been made in drawing up the overall forecast: o As always, the outlook for the world economy is important: the onset of a US recession and increased rates of inflation in many countries, together with the effects of recent large increases in oil prices, point to some potential problems. It is assumed that US economic activity will, at best, show no growth during 1979-80, but that on average demand in other Australian export markets will grow moderately. With the possible exception of beef, Australia's exports in 1979-80 are unlikely to be seriously affected, either directly or indirectly, by a temporary slowdown in activity in the United States if that were all it were to prove to be. Of course, a more prolonged and widespread recession overseas would have more serious effects. However, at this stage, and especially within the time-frame (including the transmission lags within the international multiplier process) relevant to forecasting economic conditions in Australia in 1979-80, such effects are not considered likely during the forecast period. o The marked improvement in Australia's international competitiveness in recent years is assumed to be maintained and perhaps somewhat enhanced during 1979-80. The existing program of government overseas borrowing designed broadly to maintain the level of reserves is also assumed to continue, although the strengthening that has already occurred and is in prospect for the balance of payments should enable that program to be wound down substantially. o The Government's monetary policy is directed to restraining growth in the monetary aggregates to a degree consistent with a supply of funds adequate for sustainable growth in activity and employment while at the same time bearing down on inflation and inflationary expectations. Consistent with that objective, the Budget deficit and other formation factors, the following forecasts assume that growth in M3 over the course of 1979-80 will be not more than 10 per cent. o As discussed in Part I, aggregate wage rises are beginning to show a resurgence, reflecting wage increases gained outside indexation guidelines and on so-called 'work value' grounds. As a result of these pressures, the system is once again under review by the Conciliation and Arbitration Commission; until it is possible to discern the shape of the arrangements emerging after that review, wage forecasts are necessarily subject to a wide margin of uncertainty. Those incorporated below assume that, all things considered, the existing arrangements will produce award wage decisions equivalent to something (but not much) less than full indexation - that is, allowance for some specific discounting such as in respect of oil price increases - but without any productivity adjustment later this year. Some allowance is also made for further wage increases secured outside the system. o The forecasts assume a return to more normal seasonal conditions in the rural sector in 1979-80. Farmers are presently waiting for better rainfall in some areas, but even so, with a record planting of wheat this year, farm product seems unlikely to fall away too sharply from the record level in 1978-79. Consequently, even if export prices for wheat fall somewhat from their current high levels, and beef export prices on average are rather lower than their recent peaks, aggregate farm incomes can be expected to be sustained at around their 1978-79 level. Any assessment of future trends in the economy is necessarily subject to a considerable range of uncertainty. Forecasts can be proven wrong for a variety of reasons: the background assumptions may prove inappropriate as the year unfolds; judgments as to how economic groups will react may err; more complete statistical information may show that indicators current at the time of the forecasts have provided a misleading base from which to assess prospective trends, and so on. Caution is warranted on all these counts. A wide range of information underpins the forecasts but they are heavily dependent, in their articulation, on the quarterly national accounts estimates and, as has been pointed out in Part I, the latest estimates appear to be subject to more than usual uncertainty. The unreliability of the stepping-off point for the forecasts is more obvious in some areas than in others so it is still useful to discuss the outlook in some detail. In the nature of the exercise, however, it cannot be expected that the following assessment will be correct in detail, although its overall thrust may be hoped to prove close to the mark. {:#subdebate-92-15} #### Expenditures *Private consumption expenditures* are expected to continue to rise fairly steadily in 1979-80. With the rises in consumer prices that are already in the system and the large increase in personal income tax collections, together with the level-pegging assumed in respect of farm incomes, aggregate real household disposable income could even be a little lower in 1979-80 as a whole than in 1978-79. Those identified factors would however impart a distinct pattern to changes over the course of the year: a sizeable decline in the first half followed by growth in the second as, after 1 December of this year, the PA YE deduction schedules are reduced. Growth in private consumption for the year as a whole (though not in the second half) will therefore depend largely on a fall in the household saving ratio. The rise in the aggregate saving ratio from 14.7 per cent in 1977-78 to 16.6 per cent in 1978-79 in large measure reflected the strong rise in farm incomes in 1978-79. (Table 2 above contains historical information on an indicator of the 'non-farm' saving ratio which fell by about 1 percentage point in 1978-79.) A more normal year for the rural sector could be expected, of itself, to reverse that movement in 1979-80. In addition, there is likely to be a delayed response in spending to the 1978-79 boost to farm incomes, as well as efforts to maintain expenditure among non-farm households. More generally, of the two major elements in the consumer uncertainty which seems to have kept the saving ratio high - the level and change in inflation and unemployment - the effect of recent developments in the former may be to offset partly the reduction which the large changes in farm incomes can be expected to engender in 1979-80. All in all, it seems likely that consumption will continue to grow at a subdued rate of between 2 and *2i* per cent per annum unless an unexpected lift in consumer confidence occurs. *Private investment in dwellings* has shown firm signs of recovery over the past year; while there has been only slight growth in 1978-79 as a whole, growth over the course of the year has been around 9 per cent. The recovery has followed the gradual adjustment in the previously excess stock of unsold dwellings and the lift in the supply of mortgage finance over the course of 1978-79. The industry has yet to register the full benefits for activity that the increased flow of finance has generated. The 18 per cent rise in mortgage approvals by the major lenders in 1978-79 has yet to be reflected in a commensurate rise in the value of dwelling commencements. Expected general financial conditions would sustain some growth on the present level of mortgage lending, and for that and other (e.g., 'pipeline') reasons a higher level of commencements appears to be in prospect for 1979-80. Since the rise in commencements still has some way to go before it is fully reflected in the level of construction activity in the industry, quite firm growth in activity also seems to be in prospect for the coming year. The large increase in *private business investment* in 1978-79, currently estimated at *9%* per cent, owes much to the surge in *plant and equipment investment:* real growth in this component was about 12 per cent compared with a fall of 1 per cent in 1977-78. Some of this strength no doubt reflected some advancement of investment in order to qualify for the 40 per cent investment allowance. While there could be some reaction to this in the coming year, available anticipations data for the non-farm sector for 1979-80 point to the maintenance of present plant and equipment investment levels, with a measure of growth over and above that depending mainly on the extent to which rural producers plough some of last year's record farm incomes back into their properties. *Other building and construction investment* seems set to record growth similar to the *4i* per cent achieved in 1978-79 which followed growth of 8 per cent for 1977-78. The value of building approvals for the second half of 1978-79 was some 1 9i per cent above the level in the corresponding period in 1977-78; investment anticipations data also point to continued strong growth in this area. Both in the near and medium-term, major new investment projects, particularly in the minerals and energy-related areas (including aluminium smelters in that category), can be expected to contribute to strong growth in expenditures on building and construction. As indicated above, the 1979-80 Budget and public borrowing programs imply continued real growth in expenditures on goods and services of the Commonwealth Government and its enterprises. The level of payments to the States and local governments and the Loan Council programs approved on behalf of them (and State authorities) should enable a modest rate of growth in their expenditures. In practice, the disposition of total funds available to State and local governments is substantially at their discretion. There is therefore considerable uncertainty as to the 'mix' of expenditures in that area of the public sector. A reasonable expectation is that *total public sector expenditures* on goods and services will grow in real terms at a rate little different from that in 1978-79. Because of the lower level of imports of defence equipment this year, the national accounts estimates, which are measured on a deliveries basis, can be expected to show growth below the *2i* per cent presently recorded for 1978-79. On the latter basis, the ratio of total public sector expenditures to non-farm product at current prices is projected to fall to around *25i* per cent, compared with just over 26 per cent in 1978-79 and around *26i* per cent in 1977-78. As noted in Part I, it is difficult to explain the rundown in *non-farm stocks* in the June quarter 1979. The following activity forecast? assume that there will be some correction of this position early in 1979-80 and that a fairly steady pattern of accumulation will then be maintained. Overall, non-farm stock accumulation is thus forecast to make a positive contribution to growth in 1979-80. In line with the strong growth realised in the rural sector, *farm and miscellaneous stocks* were built up by some §1109 million over the past year. For 1979-80 as a whole, the shipping of these accumulated stocks overseas is expected to be broadly matched by their replenishment from this year's output. {:#subdebate-92-16} #### Balance of Payments *Exports of goods and services* are expected to grow strongly in volume terms in the coming year, though not at the very rapid rate achieved in the second half of 1978-79. Farm goods exports fell by some 10 per cent in 1978-79 as a whole and this fall should be more than regained in 1979-80; the extent of the gain is likely to depend more on the capacity of the wharves and the available shipping to move last year's record wheat crop than on the prospects for farm output this year. Non-rural exports grew by around 10 per cent in 1978-79. The gains have been quite broadly based and owe much to the improved competitive position of Australian producers. *Imports of goods and services* in volume terms increased by 9 per cent in 1978-79, with considerably faster growth in imports of plant and equipment and related products. If, as expected, investment in plant and equipment is flatter in the year ahead, there could be a corresponding slowing in imports, bringing them back more into line with the growth in domestic demand. Thus imports of goods and services are forecast to grow considerably less rapidly in 1979-80 than they did in 1978-79. Australia's high self-sufficiency in domestic oil production, and energy more generally, should ensure that its balance of payments is less adversely affected than that of many other countries by recent oil price rises. The uncertainties relating to the world economic outlook, in particular the prospect of a period of stagnation in the United States, can be expected to take some of the steam out of the commodity price recovery which was evident in 1978-79. Even though average export prices are expected to rise for the year as a whole, the increase in oil and other import prices is likely to reverse somewhat in 1979-80 the sharp improvement in the terms of trade which was experienced in 1978-79. None the less, the prospective improvement in the balance of trade in volume terms is likely to be sufficient to ensure a decline in the *deficit on current account* between 1978-79 and 1979-80. Present indications are for an improved rate of *net apparent private capital inflow* in 1979-80. Changes in relative interest rates and exchange rate expectations will, as usual, have a bearing on that. However, the expected strengthening of our trade balance together with the continuation of domestic economic policies designed to bear down on inflation should continue to foster a favourable climate for foreign investment in Australia; there are also growing signs of increased inflows of long-term capital for development projects. Under these conditions, it seems probable that the special program of overseas borrowing which was mounted by the Government in September 1977 can be wound down significantly in the year ahead, though such borrowings may still need to be somewhat above the scale of borrowing undertaken in the 1960s and early 1970s. {:#subdebate-92-17} #### Monetary Conditions Commensurate with the improved position being forecast for the balance of payments in 1979-80, the *private external account* seems likely to turn to a strong surplus position following a net outflow of private sector foreign exchange in 1978-79 of $254 million. That full-year outcome reflected a deficit on private sector foreign exchange transactions of $688 million in the first eight months of the year, followed by surpluses in the final four months aggregating to $434 million. While the latter movement represents no more than a return towards a more normal balance of payments situation, a continuing injection of new liquidity into the domestic economy on the scale of recent months would add to the task for monetary policy in the coming year. The substantial reduction in the prospective Budget deficit goes some way towards 'making room' for this otherwise welcome development. Even so, if growth in M3 is to be kept to not more than 10 per cent over the course of 1979-80, it will be necessary to draw off more domestic liquidity via increased sales of government securities to the non-bank private sector. Subscriptions to Australian Savings Bonds (Series 14) have been reasonably strong of late, suggesting that they can sell well, and without significant disruption to the mortgage lending institutions, if they are priced competitively. Net sales of conventional bonds - especially longer-dated bonds - have been subdued for much of 1979, though there has recently been increasing investor interest in shorter-dated securities. Rural credits advances by the Reserve Bank could potentially be swollen this year by a sizeable first advance on the wheat crop which, under the new price stabilisation scheme arrangements, is likely to be higher in per tonne terms than in 1978-79. The full potential increment to domestic liquidity from this source was considerably reduced in 1978-79 (but, in effect, shifted into 1979-80) by funding from the private sector by commercial bills. As mentioned in the Budget Speech, it is the Government's intention that arrangements again be sought for financing advances to growers so as to minimise the addition to liquidity in 1979-80. Developments in the net borrowing and lending positions of the major sectors in the economy should facilitate the bond placement task in the period ahead. The approved Loan Council programs for Commonwealth and State authorities, together with estimated borrowings by 'smaller' authorities which are not subject to these programs, are expected to total around $2550 million this year compared with actual borrowings of $2153 million in 1978-79 (the figures include approved 'infrastructure' borrowing of $400 million in 1979-80 compared with $149 million in 1978-79). The increase of up to $400 million (depending on the amount of infrastructure borrowing overseas) compares with a reduction in the Commonwealth's domestic deficit in 1978-79 of some $1400 million. Taken together, these major components are therefore expected to lead to a significantly lower public sector borrowing requirement than in 1978-79. The overall product and employment outlook, together with the projected outcome for wages and prices, implies some recovery in the profit share and reasonable growth in profits in 1979-80. In conjunction with the forecasts for business fixed investment and inventories this suggests that the corporate sector's borrowing requirement in 1979-80 will be not much changed from that in 1978-79. On the other side of the market for borrowed funds, the projected decline in the saving ratio implies that net lending by the household sector (including unincorporated enterprises) will decline in 1979-80. However, as noted above, the improved prospect for private capital inflow suggests a more positive funds contribution from external sources in the period ahead. Other factors will also bear on the price at which the market for funds is cleared. The acceleration in the rate of inflation has put some upward pressure on interest rates over the past half-year but the continued firm anti-inflationary stance of policy should help to assure the market that these pressures are being contained. {:#subdebate-92-18} #### Product The above outlook for domestic demand components and the balance of trade suggests growth in *gross non-farm product* of over 3 per cent for 1979-80 as a whole; growth over the course of the year would be at much the same rate. If there is a return to more normal seasonal conditions this year and some consequent fall in *farm product,* growth in *gross domestic product* would be somewhat less than the projected growth in non-farm product and thus a good deal less than the 4.7 per cent growth in 1978-79 - probably in the range of 2 to *2i* per cent. {:#subdebate-92-19} #### Labour Market For purposes of assessing the strength of the labour market the more relevant aggregate to consider is the growth in non-farm product; adventitious movements in farm product such as that which occurred in 1978-79 (and which could be partially reversed this year) have their concomitant more in changes in productivity in the farm sector than in demand for labour. Non-farm product is expected to grow in 1979-80 a little faster than the present estimate for 1978-79. That having been said it may be reasonable to assume that growth in activity overall may not be sufficient to sustain growth in *civilian employment* in 1979-80 as strong as that over the course of the past year. Even though civilian employment may expand more slowly, particularly in the first half of the year, than has been recorded recently, in year-on-year terms the increase should still be a little above the *i* per cent increase in 1978-79 as a whole. A one per cent increase has been assumed for the estimates of PAYE tax collections. Growth in *total employment* should be of a similar order. The wage 'overhang' could be expected to be further reduced in aggregate terms in 1979-80. However, as discussed above, the process of closing the wages/ productivity gap has been protracted and has been predominantly one of increased productivity through labour-saving capital investment. That in turn has implications as to the appropriate returns to labour and to capital for the future. In addition there remains the problem, noted earlier, of the present distortions *within* the structure of wage rates and which finds - and on present prospects will continue to find - its reflection in a relative lack of job opportunities for the unskilled, including young people seeking their first job. The prospects for the level of *unemployment* depend also on the trend in the labour force *participation rate.* Should the declining trend in the participation rate continue, the level of unemployment as measured by the labour force survey would remain broadly unchanged in 1979-80, as it did in 1978-79. Some increase in unemployment is not out of the question; a large fall in the immediate future would seem to be unlikely - that must await stronger growth in activity and/or a moderation in wage demands. Although survey unemployment has flattened out, the level of unemployed registered with the CES and receiving unemployment benefits has continued to rise over the past year, evidently implying a higher proportion of survey unemployed in receipt of benefits. On the assumption that this trend continues into 1979-80, albeit at a slower rate, the Budget estimates allow for an average level of unemployment benefit recipients in 1979-80 of 325 000 compared with around 306 000 in 1978-79 (the level of unemployment benefit recipients at June 1979 was a little under 315 000). {:#subdebate-92-20} #### Incomes and Prices *Award wages* are calculated to rise by at least 8i per cent in 1979-80 following an increase of 6 per cent in 1978-79. After allowance for some further increase in overtime and some continued slippage outside indexation guidelines, *average weekly earnings* on a male units basis could rise by 9 to 9± per cent in 1979-80 following growth of around 7$ per cent for the previous year. The projected year-on-year growth in average weekly earnings will lag behind the rise in the CPI because of the delayed response to the acceleration in the rate of inflation under the half-yearly indexation system. Direct year-on-year comparison of wages and prices would thus provide a misleading picture of the underlying trend in real wages as this relationship would tend to be reversed in the following year. Obviously, given the state of flux surrounding the system of wage determination at present, the wage assumptions are something of a 'wild card' in the forecast for 1979-80; what can be said with assurance is that a lower wage outcome would have a favourable impact on the prospective rate of inflation, the level of activity and employment (and hence unemployment). The likely acceleration in wage costs is not, of course, the only reason for the forecast rise in the rate of inflation. Also to be taken into account is the impact of international inflationary forces. The surge in beef and oil prices since the beginning of 1979 has already been sufficient to add directly 3 full percentage points to the rise in the CPI over the course of 1979. Most of the beef price rise has passed through into the CPI in the first half of 1979 and most of the direct effects of the oil price rises will be felt in the second half. There will also be further indirect effects of the latter over the course of 1979-80. Beef prices are not expected to rise over the course of 1979-80 as they did in 1978-79; these movements may even work to moderate the rate of inflation somewhat, at least in the first half of the year. Changes in the health care system and in doctors' fees, taking effect from 1 September and 1 November respectively, will also lift the level of the CPI (though not, in the case of the former, the personal consumption deflator) in the coming December quarter. With these various influences taken into account, the increase in the CPI for 1979-80 as a whole is put at around 10 per cent. That would correspond to a movement over the course of the year of a little under 10 per cent following the rise of 8.8 per cent over the course of 1978-79. It is important to note, however, that by 1980 the major identified 'humps' will be out of the indexes and, provided world commodity prices have not again accelerated (given the outlook for the international economy, acceleration does not seem likely), Australian inflation could quite quickly return to a single digit rate. As always, the chief proviso is that another price-wage-price round is averted. It is therefore of the utmost importance that, as the recent Ministerial Council meeting of the OECD indicated, the community as a whole understands and accepts the temporary drop in real incomes implied, in particular, by recent oil price increases. There would, desirably, be a similar recognition that beef and other rural commodity price gains should be allowed to restore real farm incomes which have been badly depressed for a number of years, and not be spread into a general increase in wage and salary incomes (and costs) throughout the economy. Failure to recognise these implications, reflecting in an attempt to insulate the wage earner from these commodity price increases by building them into wages, could mean a serious rekindling of the wage-price spiral that wrought so much disruption in the mid-1970s and from which the economy is still struggling to recover. Sustainable increases in living standards can come only from productivity gains; only above-normal productivity gains could obviate the short-term real income cost to Australia of the upsurge in world oil prices, while higher beef prices do not imply a *generalised* capacity for employers to pay. World-wide, a clear lesson of the 1970s is that an economy plagued by high inflation finds it very hard to yield normal, let alone above-normal, productivity gains. The more *broadly based measures of inflation* can be expected for the most part to move in a manner similar to the CPI. However, public sector costs should be more closely related to award wage costs, while the costs of dwelling construction may rise a little more rapidly than in the recent past with the expected pick-up in the level of activity in that sector. The *non-farm product deflator* is expected to rise by about 9 per cent in 1979-80, compared with the rise of 7 per cent in 1978-79. {:#subdebate-92-21} #### Overview In drawing together the foregoing forecasts it is evident that the conduct of economic policy will not get easier in the period ahead. Steady product growth should be achieved for the aggregate non-farm sector in the coming year but that is unlikely to be sufficient to make much, if any, inroad into the continuing high level of unemployment. Along with the rest of the world - but perhaps less than most other parts of it - Australia also is likely to lose some ground in the near term in the fight against inflation. The Government, for its part, is maintaining a firm anti-inflationary stance in its policy. As indicated above, with moderation in income claims, the ongoing rate of inflation could reasonably be expected to turn downwards once again as we move into 1980. Notwithstanding some troubled waters through which it has been moving in the past nine months or so, there is no doubting the return towards more fundamental strength of the Australian economy. To a degree, the prospects for a return to higher levels of growth depend, as always, on developments in the world economy. At the same time, the solid progress that has been made over the past few years in correcting the fundamental imbalances in our own economy - putting our own house in order - means that Australia is now better placed to make the most of available opportunities. Our manufactured exports are now competing more effectively in overseas markets and Australia is clearly becoming a more attractive location for foreign investment. This, coupled with the natural advantages the country enjoys in its mineral deposits and energy resources, augurs well for the future. Although an oil importer, Australia is already a substantial net exporter of energy overall. The restoration, in large degree, of the prosperity of the rural sector of the economy should also provide a more viable basis for future growth. There is no way in which a Government today can hasten the restoration of prosperity in the economy generally except by continuing to do what it can to establish the pre-conditions for sustainable growth. 1978-79 saw substantial progress in that regard and further progress should be made in 1979-80. {: .page-start } page 123 {:#debate-93} ### STATEMENT No. 3- ESTIMATES OF OUTLAYS, 1979-80 This Statement presents detailed estimates of Budget outlays in 1979-80, classified according to their primary purpose or function. Comparable figures are also shown for 1977-78 and 1978-79; data for the period since 1969-70 are presented in Statement No. 6. {: .page-start } page 123 {:#debate-94} ### SUMMARY The following table shows in summary form, total outlays classified by major functional and sub-functional headings : The following chart gives a broad impression of the relative size of the major functional blocks of outlays and recent and projected movements in those proportions. It is emphasised that changes in these functional blocks from one year to another are affected by a number of special factors, such as large repayments by the Australian Wool Corporation in 1977-78 and by Qantas Airways Ltd in 1978-79, and changes in administrative arrangements, particularly those relating to the transfer of functions to the Northern Territory as part of the selfgovernment arrangements. Outlays for defence in 1979-80 are estimated at $2887 million, an increase of 10.8 per cent over 1978-79. This estimate is partly in April 1979 prices but it does allow for the June National Wage Decision and it includes a bulk provision of $30 million for prospective increases in wages and salaries of service and civilian defence personnel during 1979-80; provision for other cost increases in 1979-80 will, as appropriate, be made in Additional Estimates. The total figure implies an increase in defence outlays of about 2.6 per cent in real terms in 1979-80 and represents 9.1 per cent of estimated total Budget outlays (compared with 9.0 per cent in 1978-79). {:#subdebate-94-0} #### Manpower Costs Manpower costs recorded here cover the service and civilian manpower costs of the Department of Defence that cannot be appropriately allocated to other specific functional categories. Other elements of defence manpower are recorded under the categories Defence Science and Technology, Natural Disasters Organisation, Defence Co-operation and Equipment and Stores while manpower costs associated with the defence-related activities of the Department of > Productivity are recorded in the category Industrial Capacity. The net increase of $110.0 million in 1979-80 mainly reflects the effects of the December 1978 and June 1979 National Wage Case decisions ($55 million) and the implementation of the recommendations of the Committee of Reference for Defence Force Pay (the Coldham Committee) in respect of allowances that complement salary ($31 million). The main allowances affected are: Service allowance, up by 26 per cent to $1280 per annum; Seagoing allowance, up by 37 and 40 per cent to $750 and $944 per annum for single and married personnel, respectively; and Flying allowance, a new allowance which replaces flying pay, flying allowance and flight pay, with rates varying from $550 per annum to $2800 per annum. The estimates provide for service manpower increases of 600, raising the target service strength at 30 June 1980 to 70 861. These increases are intended to enable new equipment coming into service to be adequately manned, as well as to provide for other operational requirements and for national tasks such as the raising of a Counter-Terrorist Force. The total civilian staff ceiling for the Department of Defence has been set at 30 400 at 30 June 1980, a reduction of 403 on the 30 June 1979 ceiling. The reduction is to be effected across a broad range of departmental activities. The main factors in the increase of SI 8.1 million in the provision for defence force retirement and death benefits are the annual update in pension rates in July 1979 (estimated to cost $9 million) in line with the increase in the Consumer Price Index of 8.2 per cent over the year to the March quarter 1979, and the forecast higher level of entitlements in respect of the projected net increase of 1421 in the pensioner population. Including the allowance for prospective wage and salary increases, defence manpower costs recorded under this heading constitute 51.5 per cent of estimated total defence outlays in 1979-80, compared to 51.7 per cent in 1978-79. {:#subdebate-94-1} #### Defence Equipment and Stores Outlays on defence equipment and stores in this category are intended to ensure that operational equipment (ships, aircraft, armour, artillery, etc.) are adequate to provide a nucleus capability to meet possible contingencies. (Some provisions for equipment and stores are also included in the Industrial Capacity and Defence Science and Technology categories). Outlays on 'capital' type equipment in 1979-80 are estimated at $437.3 million, or $34.0 million more than in 1978-79. The main increase is in naval construction ($57.4 million) and is largely attributable to significantly increased progress payments of $153.3 million on the three Guided Missile Frigates, two of which are scheduled for delivery in 1981. Provision is also made for payments in respect of many other on-going new equipments at varying stages of acquisition, including 15 fast patrol boats, a heavy landing ship and an underway replenishment ship for the Navy, 103 Leopard tanks and 20 Rapier surface to air missile systems including Blindfire guidance systems, for the Army. In addition, provision is made for work to proceed on updating the River class frigates and refurbishing Mirage and Macchi aircraft. Provision is also made for a start on some new equipment projects, details of which will be announced by the Minister for Defence. The reduction in expenditure on aircraft and armoured vehicles reflects progress towards completion of the Hercules CI 30, Orion P3C and Leopard tank projects. Expenditure on supporting equipment and stores such as ammunition, rations, fuel, clothing, etc. for the maintenance of the forces is estimated to increase by $54.3 million in 1979-80. This mainly reflects cost increases and exchange fluctuations ($18 million) and payments arising from increases in commitments entered into in previous years which will result in some build up in stock levels, together with some increase in activity. Outlays on the repair and periodic overhaul of ships, aircraft, vehicles, weapons and equipment are estimated to increase by $16.0 million, of which $8.5 million represents an accounting adjustment to reflect more correctly true repair and overhaul costs (with a corresponding reduction in the Supporting Equipment and Stores requirement); the balance is attributed to higher costs generally, part of which reflects the level of sophistication needed to maintain the equipments that have come into service in recent years. Included under this heading are most of the periodic payments, estimated at $238 million for 1979-80, to the United States Foreign Military Sales (FMS) Trust Account. This is an account established and controlled by the US Department of Defense to record transactions relating to Australia's acquisition of military equipment and stores through the US Defense Security Assistance Agency. Almost all defence equipment acquisitions from the United States of America are processed through the FMS organisation. The final instalment of $4.4 million of the capital, cost of acquiring the Boeing 707 (VIP) aircraft is also included under the Defence Equipment and Stores category. {:#subdebate-94-2} #### Defence Facilities Expenditure under this heading is to provide and maintain facilities, including living and working accommodation for the Defence force and Department of Defence (other than for Industrial Capacity and Defence Science and Technology). New programs of assistance to the States for the construction of houses for servicemen are in abeyance pending the determination of future arrangements for Service housing. The 1979-80 allocation of $1.5 million is for the completion of programs approved in previous years and for upgrading of some older dwellings. Provision is made, however, in 'Other Buildings, Works, Furniture and Fittings' for the construction of 76 houses at Service establishments and in Acquisition of Sites and Buildings' for the acquisition of 65 houses from private sources. The major part ($57.7 million) of the projected 20 per cent increase in expenditure on 'Other Buildings, Works, Furniture and Fittings' is to meet progress payments on projects committed in earlier years. These include provision of facilities at Garden Island Dockyard (NSW) for the patrol frigates on order, further work on earlier phases of the development program for Williamstown Naval Dockyard (Vic), construction of new accommodation for Army personnel at Randwick (NSW), and further progress towards the completion of the redevelopment of facilities at Edinburgh (SA) for operation of long range maritime patrol aircraft. Expenditure on new works projects in 1979-80 is estimated at $21.5 million or 27 per cent of the provision; significant new commencements include a further stage in the development of Williamstown Naval Dockyard (Vic), construction of Naval patrol boat bases at Cairns and Darwin, the construction of an Army schools complex at Bonegilla (Vic.) and a further stage in the development of the RAAF Operations Command Headquarters at Glenbrook (NSW). The estimated 22.4 per cent increase in expenditure on repairs and maintenance of facilities in 1979-80 reflects increased costs, an accounting change resulting in an increase in day labour costs attributed to defence works (with a corresponding increase in the receipts of the Department of Housing and Construction) and an additional provision to partially overcome a backlog of essential repairs and maintenance tasks. {:#subdebate-94-3} #### Industrial Capacity Most expenditure under this heading is for maintenance in government aircraft and munitions factories and, in industry, of capacity which cannot be fully utilised in peace-time, for production of materiel essential for defence. Other expenditure includes the rationalisation of the defence aircraft industry at Fishermans Bend (Vic.) and Bankstown (NSW); additional expenditure to upgrade machinery and plant at the aircraft and munitions factories; the initial funding of an offset contract with Boeing for participation in 757 aircraft manufacture; the continuing production and further development of the Nomad aircraft (of which 90 had been completed at 30 June 1979); and the purchase and manufacture of reserve stocks of essential defence materiel. {:#subdebate-94-4} #### Defence Science and Technology Expenditure on defence science and technology is aimed at assisting the Services to keep abreast of advances in defence technology and at developing weapons and weapon systems suited to Australia's defence needs. The estimated expenditure of $98.0 million in 1979-80 covers salaries, other administrative and operating expenses, machinery, plant, stores and works services of the defence science establishments and laboratories and the Woomera range. A further reduction of 140 in civilian employment is proposed during 1979-80 in line with the 30 June 1980 staff ceiling for the Defence Science and Technology area of 4803. Considerable effort is being devoted to activities such as the Jindalee overthehorizon radar, underwater detection and electronic warfare techniques. Joint Project (UK/Australia) trials activity has virtually ceased. The net increase of $6.7- million mainly reflects effects of National Wage Case decisions and increased activity on the Jindalee project. Defence Co-operation Through defence co-operation the Government aims to help friendly countries in the region to strengthen their own and therefore the region's defence capacity. Estimated expenditure of $28.5 million in 1979-80 includes $8.9 million in assistance to Indonesia for such purposes as survey and mapping work in Maluku Province (the Moluccas), provision of Nomad aircraft, maintenance of CI 30 aircraft as well as training in support, maintenance and communications skills. Also included is provision for new projects to be announced by the Minister for Defence. Continuing assistance is provided for Malaysia ($3.9 million) and Singapore ($0.5 million). Bilateral programs with these two countries place emphasis on training assistance and combined exercises rather than materiel assistance. The increase to $13.1 million in the provision for defence co-operation activities with Papua New Guinea in 1979-80 provides for greater project assistance, including for survey and mapping and civil engineering tasks by Australian units. At the same time provision is made for further reductions in manpower and support costs of Australian servicemen in Papua New Guinea, in line with the continuing localisation of the Papua New Guinea defence force. Current equipment projects include Nomad aircraft, communications equipment and other miscellaneous equipments. A large part of .the allocation for 'other countries' is devoted to the development of a co-operative relationship in defence matters with countries of the South West Pacific. Increased provision is also made for military assistance to the Philippines and Thailand. {:#subdebate-94-5} #### Storage and Transport Services This item provides general storage and shipping services for Defence and furniture removals and storage for servicemen, civilians and their families on reposting or transfer. The increase of $1.4 million is mainly due to wage increases, higher costs and some increase in the estimated number of removals. {:#subdebate-94-6} #### General Administrative Expenditure This category covers a range of items relating to service and general defence civilian functions including rent, travel, office requisites, postage and telephones, fuel, light, power and water, freight, compensation payments and medical and dental services. The proposed increase of $24.0 million in 1979-80 reflects increases in costs and an increased level of activity, particularly in the areas of training and exercises, computer support and some large one-off advance payments required to be made to other Governments in respect of training courses and housing rentals. {:#subdebate-94-7} #### Natural Disasters, Civil Defence and Other Expenditure under this heading covers expenses of the Natural Disasters and Civil Defence Organisation, including salaries and administrative expenses, reimbursement of the States for some salaries paid to State civil defence personnel and Commonwealth assistance by way of equipment and stores to State and Territory Emergency Services, maintenance of war graves ($1.8 million) and variations in Trust Fund Balances. The expected closure of the ANZUK Support Trust Account in 1979-80, which involves the distribution, after settlement of all financial transactions, of the balance of $6.1 million to the Commonwealth, UK and New Zealand Governments, is the main reason for the increased expenditure. {:#subdebate-94-8} #### Recoveries and Repayments The principal items here are payments made by service personnel under the Defence Force Group Rental Scheme in rents for houses provided for their use ($37.6 million); charges made for meals and accommodation provided at Defence establishments ($19.5 million); returns from disposals, recoverable services for research and development; and other miscellaneous receipts. The net increase of SI 8.6 million reflects a number of factors including the closure of the ANZUK Support Trust Account and the distribution of the outstanding balance ($5.3 million); increased sales of Nomad aircraft (up $1.0 million to $1.7 million); and an increase in disposals revenue, largely through sales of obsolete C130 aircraft which are estimated to yield $12.7 million in 1979-80. {:#subdebate-94-9} #### Allowance for Prospective Wage and Salary Increases The allowance of $30 million is the present estimate of the amount required to meet prospective increases in wage and salary rates of civilian and service personnel during 1979-80; the amount in fact required for this purpose will depend on actual increases in wages and salaries and will be reflected in additional appropriations later in the year. o {: type="1" start="2"} 0. EDUCATION Total outlays on education are estimated to increase by 3.1 per cent in 1979-80 to $2570 million; this total is equivalent to 8.1 per cent of Budget outlays. It should be noted that comparisons of total outlays on education (and some components) between 1978-79 and 1979-80 are affected by changes in financial arrangements with the Northern Territory. Whereas *total* expenditures on TAFE institutions and schools in the Northern Territory in 1978-79 (and earlier years) were recorded under Education, only the specific purpose payment components are so recorded in 1979-80; the basic 'State-type' components will be determined by the Northern Territory Government (and allocated largely from the general purpose funds made available by the Commonwealth - see Section 10a below). {:#subdebate-94-10} #### Tertiary Education {:#subdebate-94-11} #### Universities and Colleges of Advanced Education The Commonwealth fully funds the operations of all universities and colleges of advanced education through the Tertiary Education Commission. The estimates for 1979-80 comprise broadly the second half of the 1979 programs and the first half of the 1980 programs. Details of the 1980 programs were announced by the Minister for Education on 5 June 1979. In real terms the base programs for 1980 represent a decrease of 1.4 per cent compared with 1979. This reduction will be confined to expenditures on buildings and equipment; recurrent expenditures in 1980, which is the second year of the fixed triennium for recurrent expenditures, will be maintained at the same real levels as in 1979. The grants to be provided in 1979-80 will enable institutions to maintain student intakes at existing levels. At the same time, however, the Tertiary Education Commission has been asked to monitor carefully the use and allocation of resources, particularly in the area of pre-service teacher training, to ensure as far as is possible that the supply of trained manpower is in reasonable relationship to demand. The reduced allocation for capital expenditures will enable commitments to on-going projects to be met and, in addition, provide for small numbers of high priority projects, including the Australian Maritime College where teaching is scheduled to commence at the Newnham site in 1981. With the transfer, on 1 July 1979, of responsibility for education in the Northern Territory to the Government of the Northern Territory, education funding has been placed on the same basis as applies in the States. Included in the 1979-80 estimate of grants to CAEs in the States and NT is an amount of $2,965 million for the operation of the CAE component of the Darwin Community College. Recurrent grants, other than equipment grants, for universities and colleges of advanced education in 1981 have already been determined (at the same real levels as in 1979 and 1980) under the fixed triennial funding arrangements applicable from 1979. Under these arrangements, funds for capital projects and equipment for universities and colleges are determined annually. {:#subdebate-94-12} #### Technical and Further Education The Commonwealth provides grants to the States to compensate them for not levying fees for vocational courses at technical and further education institutions and for special and particular purposes designed to improve the quality and availability of technical and further education. At the same time State Governments - which are responsible for three-quarters of total outlays in this area - are required to maintain their own efforts. From 1979-80 comparable specific purpose grants are being provided to the Northern Territory for TAFE institutions in the Territory; the relevant amount in 1979-80 is $3,031 million. The 1979-80 estimates are based on the calendar year programs for 1979 and 1980. The approved total program for 1980 represents a 10.7 per cent increase in real terms over 1979, which in turn was 19 per cent higher in real terms than the 1978 program. These large real increases emphasise the high priority which the Government is attaching to this form of education. The Government is currently examining the recommendations contained in the report of the Williams Committee of Inquiry into Education and Training. The level of recurrent support for TAFE in 1981 will be considered in the context of this examination. *Further Education in the ACT* An Office of ACT Further Education was established in February 1979, within the Department of Education, with the objective of co-ordinating and developing technical and further education in the ACT, including the activities of the School of Music and the School of Art. The estimates provide $23.7 million ($11.1 million recurrent and $12.7 million capital) for the five ACT TAFE institutions in 1979-80, an increase of 22.7 per cent over 1978-79. This reflects projected growth in enrolments, and a 40 per cent increase in expenditure on building projects, mainly for the School of Art and the Woden TAFE College. {:#subdebate-94-13} #### Cost Supplementation of Grants The 1979-80 figures shown in the table for the programs of the Tertiary Education Commission are in estimated June 1979 prices. The wage and salary components of recurrent grants to universities, CAEs and TAFE institutions - which constitute the great bulk of total grants for these bodies - are subject to supplementation in line with increases in wages and salaries. The bulk provision of $70 million is the present estimate of the amount that will be required to supplement these grants during 1979-80. {:#subdebate-94-14} #### Overseas Student Charge The Government has decided that, from the commencement of the 1980 academic year, private students from overseas countries who enrol for the first time, or who change their courses of study, at Australian universities and colleges of advanced education will be required to contribute to the cost of their tuition through an overseas student charge. Details of the new arrangements will be announced following consultations with some major source countries; the charge is estimated to yield about $6 million in 1979-80. Additional information on grants to the States and the Northern Territory for universities, colleges of advanced education, and technical and further education institutions is provided in Chapters IV and V of *Payments to or for* {:#subdebate-94-15} #### Schools *Schools in the States and the NT* The Commonwealth provides grants to the States through programs of the Schools Commission for recurrent and capital costs of State Government Schools. Payments for recurrent and capital purposes are also made to the States for on-passing to non-government schools. In addition, Commonwealth assistance is provided to both government and non-government schools systems for disadvantaged schools, migrant and multicultural projects, schools for handicapped children, teacher development and innovatory projects. In round terms Commonwealth grants represent about 13 per cent of total spending on government schools and about 35 per cent of total spending on non-government schools. During 1979-80, the Northern Territory will be brought within these arrangements and from the 1980 school year onwards will participate fully in the programs of the Schools Commission. A total specific purpose payment of $5,294 million is included in the 1979-80 estimates for schools in the Northern Territory. Total Commonwealth assistance to the States in 1980 through the programs of the Schools Commission is estimated to decline by 5.7 per cent in real terms. This will be reflected in lower allocations for capital projects and some joint programs. Present real levels of recurrent support, and expenditure on disadvantaged groups, will be maintained and, in the case of migrant education, increased. The cut-back in the total allocation for government schools has regard to the fact that enrolments in government schools have been falling in most States since 1978, and that by the end of 1979 all States are expected to have at least reached the targets which were established by the Karmel Committee and reaffirmed by the Schools Commission as minimum desirable levels of resource use. For planning purposes, the Government has decided that grants through the Schools Commission programs will be maintained at the same real level in 1981 and 1982 as in 1980. {:#subdebate-94-16} #### Cost Supplementation of Grants The 1979-80 estimates of the School Commission programs are at estimated June 1979 price levels and will be supplemented for wage and salary increases affecting non-capital components of the program; $25 million is the present estimate of the supplementation required during 1979-80. Further details of grants to the States and the Northern Territory for schools are provided in Chapters IV and V of *Payments to or for the States, the Northern Territory and Local Government Authorities 1979-80.* *Government Schools and Pre-schools in the ACT* Outlays for government schools and pre-schools in the ACT are estimated at $75.1 million in 1979-80, a decrease of 3.4 per cent compared with 1978-79. Current expenditure is estimated to rise by 5.7 per cent to $68.1 million but capital expenditure is estimated to decrease from $13.3 million to $7.0 million as the school building program winds down. Following an estimated decline of 3 per cent in 1979 government school enrolments are projected to fall by a further 1 per cent, to 38 210, in 1980 (primary down 0.6 per cent, high schools down 3.2 per cent and secondary colleges up 3.0 per cent). *Non-Government Schools in the ACT* The Commonwealth provides per pupil grants to non-government schools in the ACT equivalent to those paid to non-government schools in the States from both the Schools Commission program and from State Governments. This is the major component of recurrent assistance and is estimated at $9.4 million in 1979-80, compared with $8.6 million in 1978-79; the increase reflects a projected 5 per cent increase in enrolments in 1980 (to 16 358 students), following an increase of 6.8 per cent in 1979. Capital grants also are provided to non-government schools in the ACT under arrangements similar to the Schools Commission program of capital assistance for non-government schools in the States. Additional assistance is available under an interest subsidy scheme similar to schemes operating in the States. Under this scheme non-government schools can borrow from lending institutions for approved building projects and the Commonwealth will reimburse interest charges up to 10 per cent per annum for up to 20 years. Total capital assistance is estimated at $3.8 million in 1979-80, compared with $4.0 million in 1978-79. *School Transport in the ACT* The cost of subsidised bus services for children travelling to and from school is estimated to increase to $2.2 million in 1979-80. {:#subdebate-94-17} #### Curriculum Development Centre The Curriculum Development Centre was established as a statutory body in 1975 to produce and market teaching and learning materials for use in Australian schools and to advise on curriculum and material development. In addition to the $2.4 million to be provided from the Budget in 1979-80 the Centre is expected to have a further $0.5 million available from sales of curriculum materials. Together with funds on hand, this should enable a total outlay of $3 million in 1979-80- $0.7 million higher than in 1978-79- and allows for the commencement of a long-term mathematics education project. {:#subdebate-94-18} #### Student Assistance The summary table indicates the amounts of student assistance made available in the tertiary and schools sectors, and to special groups. The main schemes in terms of expenditure are listed below; total expenditure on these schemes in 1979-80 is estimated at $222.9 million, an increase of 4.4 per cent compared with 1978-79. The maximum rates of benefit to apply under certain of these schemes in 1980 are shown below, together with the numbers of students expected to receive assistance: {:#subdebate-94-19} #### Special Groups The Budget estimates include $71.4 million for the education of special groups in 1979-80, an increase of 9.8 per cent compared with 1978-79. {:#subdebate-94-20} #### Aboriginals *A* total of $28.5 million is to be provided by way of educational assistance to Aboriginals, including: $13.2 million for the Aboriginal Secondary Grants scheme under which non-means tested assistance is provided to students of Aboriginal descent attending approved secondary schools or classes; $6.0 million for the Aboriginal Study Grants scheme under which nonmeans tested assistance is provided to persons of Aboriginal descent undertaking approved full-time or part-time courses at universities, colleges of advanced education, TAFE and other institutions; and $9.1 million in grants-in-aid and State grants provided through the Department of Aboriginal Affairs. {:#subdebate-94-21} #### Migrant and Refugee Education Substantial assistance - estimated at $31.0 million in 1979-80 - is provided through the programs of the Schools Commission for special instruction for migrant and refugee children experiencing English language difficulties in order to facilitate their participation in normal classes. Additional assistance, which is recorded under this heading, is provided to government and non-government school authorities to acquire language teaching materials and equipment for migrant and refugee children, and to pay the salaries of teachers involved in providing special instruction for refugee children; $3.1 million is being provided in 1 979-80 for these purposes. Also included under this heading is $24.1 million for the Adult Migrant and Refugee Education Program in 1979-80 for initial settlement orientation and for on-arrival and on-going English language training needs of adult migrants and refugees. This provision is to cover the costs of language teachers and to provide living allowances for adults attending courses full-time. The increase of S6.1 million (34 per cent) in 1979-80 mainly reflects the Government's decision to increase the planned refugee intake from 10 500 to 14 000, and the second year of the Galbally program to upgrade and expand English language instruction courses for migrants. {:#subdebate-94-22} #### Soldiers' Children Education Scheme Under this scheme assistance is provided for the payment of fees, fares and allowances, and for books and equipment for the tertiary education and training of children of veterans who died as a result of war service or who are either totally and permanently incapacitated or blind. Allowances are also paid in respect of children attending secondary schools. The cost of the scheme is estimated to decrease slightly from $2.9 million in 1978-79 to S2.8 million in 1979- 80 because of a projected decrease in the number of beneficiaries. {:#subdebate-94-23} #### Assistance for Isolated Children The Commonwealth provides assistance under this program to parents of primary and secondary pupils who, because of their geographical isolation, do not have reasonable daily access to a government school. A basic means-test-free boarding allowance of S500 per annum is provided, together with an additional means tested allowance. Further means tested assistance of up to S500 is available in cases of particular financial hardship. For children who study at home by correspondence there is a means-test free allowance of S200 per annum, plus a reimbursement allowance of up to S300 for eligible expenditure by parents. In cases where a second home is established to allow an isolated child to attend school a second home allowance of up to SI 275, depending on the number of children, is also available free of means test. It is estimated that 19 300 children will be assisted under the program in 1979-80 at a cost of SI 2.5 million. {:#subdebate-94-24} #### General Administrative and Other Expenditure General administrative and other expenditure of the Department of Education is estimated at S21.8 million in 1979-80, of which SI 6.8 million is for wages and salaries. Also included under this heading is SI. 025 million in 1979-80 for the Education Research and Development Committee, which provides support for research in education. {: type="1" start="3"} 0. HEALTH Total Commonwealth outlays on health are estimated at $3165.1 million in 1979-80. This represents an increase of 9.1 per cent on 1978-79 and is equivalent to 10.0 per cent of total estimated Budget outlays in 1979-80. Responsibility for the provision and financing of health services in the Northern Territory passed to the Territory under the self-government arrangements on 1 January 1979. For Northern Territory items, therefore, the expenditures for 1 978-79 shown in the following table relate only to the first half of that year for outlays other than for hospital operating costs; provision for the second half of the year was made in the global allocation paid to the Northern Territory in 1978-79 (recorded in Section 10). The estimates shown below for 1979-80 relate only to the Commonwealth's share of approved net operating costs of hospitals in the Territory and certain specific purpose payments of the kinds made to the States under national programs. A number of items of expenditure in the Health function (and elsewhere) are affected by the decision, announced in the Budget Speech, to introduce legislation to extend eligibility for Pensioner Health Benefit (PHB) Cards from 1 November 1979 to supporting parents and their dependants, and to increase the basic income test limit for eligibility for these cards from S33 a week to $40 a week for a single person and from $57.50 a week to S68 a week for a married couple. These extensions are estimated to add S12 million to outlays on Health in 1979-80 and S22 million in a full year (primarily on the pharmaceutical benefit scheme for pensioners). {:#subdebate-94-25} #### Medical Services and Benefits {:#subdebate-94-26} #### Medical Benefits The estimated increase of $64. 1 million in expenditure on Commonwealth medical benefits in 1979-80 largely reflects increased benefits stemming from the overall increase of 12.9 per cent in the level of schedule medical fees from 1 November 1979 (estimated to cost $47 million in 1979-80). But for the changed arrangements, effective from 1 September 1979, under which the general population will not be eligible for Commonwealth benefit where the schedule fee for a service is below $20, estimated outlays on medical benefits in 1979-80 would have been about $ 1 80 million higher than the present estimate. In 1979-80 the Commonwealth's contribution towards the costs of medical benefits will be as follows: pensioners (and their dependants) entitled to Pensioner Health Benefit Cards: 85 per cent of schedule fees, subject to the gap between the benefit and schedule fee for a service not exceeding $5; disadvantaged persons, as determined by doctors: 75 per cent of schedule fees for all services regardless of cost; and the rest of the population: up to 31 August 1979, 40 per cent of schedule fees, subject to a maximum patient contribution of $20 for any one service in respect of the gap between the benefit and the schedule fee; from 1 September 1979, that part, if any, of the schedule fee in excess of $20 for each service. Medical benefits for services rendered to eligible pensioners and disadvantaged persons are paid directly by the Commonwealth under bulk-billing arrangements. The private health insurance organisations, as agents for the Commonwealth, pay Commonwealth benefits to the rest of the population. {:#subdebate-94-27} #### Diagnostic Services This item relates to the running of health laboratories operated by the Commonwealth, including Pathology Laboratories, which provide services to hospitals and medical practitioners. The $2.6 million increase in 1979-80 reflects the full-year effects of administrative cost increases and the expenses of transferring the Australian Radiation Laboratory to new premises at Yallambie, Victoria. {:#subdebate-94-28} #### Treatment and Allowances for Veterans and Dependants The Commonwealth meets the costs for eligible persons of specialist, local medical officer, paramedical and dental services, of providing and maintaining surgical aids (including spectacles) and of travelling expenses incurred in obtaining medical treatment. The increase of $5.9 million reflects increased fees for professional services, together with an increase in demand for treatment. In addition, the Government has decided to re-instate eligibility for treatment for all veterans who were in receipt of a pension in respect of pulmonary tuberculosis before 2 November 1978. The extension of eligibility for PHB cards will also add to expenditure. {:#subdebate-94-29} #### Hospital Services and Benefits {:#subdebate-94-30} #### Hospital Payments Under the *Health Insurance Act* 1973 the Commonwealth: meets half the approved net operating costs of State and Northern Territory public hospitals 'recognised' under the Hospital Cost-Sharing Agreements. Payments in 1979-80 are estimated to increase by $133.1 million to $1,172.6 million. (For the first six months of 1978-79, Northern Territory hospitals were funded under other appropriations); meets half the approved net operating cost of recognised hospitals in the Australian Capital Territory. Payments in 1979-80 are estimated to increase by $1 million to $20.9 million. (The other half of approved net operating costs is met from the provision under the appropriation for the Capital Territory Health Commission); and makes daily bed payments to private hospitals of $16 a day. Payments in 1979-80 are estimated at $75 million, an increase of $2 million reflecting an expected increase in usage of private hospitals. Hospital net operating costs represent the aggregate residual operating deficits of 'recognised' hospitals after patient fees and other hospital revenues have been taken into account. From 1 September 1979, in-patient charges for insured patients will be increased by 25 per cent to $50 a day for shared-room accommodation, and to $75 a day for single-room accommodation. Eligible residents without hospital insurance will continue to be entitled to free treatment in standard wards of public hospitals. The Budget estimates reflect these increased charges and generally provide for hospitals to be able to maintain fully the levels of services and activities being provided at the end of 1978-79. The net effect of these factors is for Commonwealth expenditure for hospitals under the provisions of the *Health Insurance Act* 1973 to increase by an estimated 12.0 per cent in 1979-80. Under an amendment to the *Health Insurance Act* 1973, provision has been made for long-term patients accommodated in hospitals who no longer require hospital treatment to be reclassified as nursing-home type patients and to be required to make a patient contribution for their care and accommodation. The Commonwealth has proposed to the States and the Northern Territory that the Hospital Agreements be varied to provide for charges in respect of nursinghome type patients in recognised hospitals to be made as follows: where the patient is not a hospital insured person, the charge will be the patient contribution being paid by nursing-home patients in State Government homes in the relevant State; or where the patient is a hospital insured person and/or private patient the charge will be the total of the patient contribution and the Commonwealth nursing-home benefit payable in the relevant State. A similar principle will be applied to insured nursing-home type patients in private hospitals who will be required to pay, as part of their fees, an amount equal to the statutory nursing-home patient contribution, which will be uninsurable. Hospital benefits will be payable, but the benefit level could be reduced if the fee payable by the patient was less than the benefit plus the patient contribution. Against the background of widespread and growing concern at the increasing cost to the community of hospitals, the Commonwealth has decided to hold an independent inquiry into the efficiency and administration of hospitals in Australia. The inquiry will be conducted under comprehensive terms of reference and in co-operation with the States and the Northern Territory. An interim report is expected by the end of 1979-80. {:#subdebate-94-31} #### Hospital Insurance Subsidy This subsidy was abolished simultaneously with the health insurance levy on 1 November 1978. The amount of $3 million shown for 1979-80 is to meet estimated residual payments. {:#subdebate-94-32} #### Hospital Benefits Reinsurance Trust Fund Under the provisions of the *National Health Act,* the Commonwealth subsidises private health funds by sharing deficits that arise in reinsurance accounts required to be maintained by registered hospital insurance organisations. The deficits occur from paying benefits to high risk and chronically ill members. The Commonwealth's contribution to the Fund in 1979-80 will be $50 million, the same as in 1978-79. However, during 1978-79 unspent balances in the trust fund rose by $3 million; it is not anticipated that these balances will be run-down in 1979-80. {:#subdebate-94-33} #### Other Hospital Benefits This item reflects mainly expenditure authorised by the *National Health Act* on special account subsidies that ceased on 30 September 1976 with the establishment of the Hospital Benefits Reinsurance Trust Fund. Carry-over expenditure in 1979-80 is estimated at $0.1 million. {:#subdebate-94-34} #### Repatriation Hospitals Hospitals and clinics are maintained in each State for the treatment of eligible veterans and their dependants; to a limited extent non-repatriation patients also are treated in Repatriation hospitals while some use is made of private and State public hospitals for repatriation patients where this is appropriate. The estimated increase of $16.3 million (10.6 per cent) in 1979-80 reflects higher wages and salaries and operational costs associated with the running of repatriation institutions, as well as additional expenditure on buildings and works. {:#subdebate-94-35} #### Mental Health Facilities and Services Expenditure on mental health facilities and services is estimated at $8.2 million in 1979-80. Of this amount, $7.6 million relates to medical care and treatment for eligible veterans and their dependants in State mental hospitals. Assistance for non-residential mental health facilities is provided under the Community Health Program. {:#subdebate-94-36} #### Hospitals Development Program Assistance to the States under this Program ceased on 30 June 1978. {:#subdebate-94-37} #### Launceston General Hospital The Commonwealth is meeting 50 per cent of the approved costs of Stage 1 of the re-development of the Launceston General Hospital. An amount of $5.5 million is to be provided in 1979-80, $0.5 million more than in 1978-79. Construction of this stage is expected to be completed by the end of 1980-81. {:#subdebate-94-38} #### Health Program Grants Health Program Grants, authorised under the *Health Insurance Act* 1973, are payable to eligible organisations to meet the cost, or such proportion of the cost as the Minister may determine, of approved health services, including contract medical services, provided outside of hospitals by medical practitioners employed on a salaried or sessional basis. Eligible organisations impose charges, where appropriate, for services. Health Program Grants are also available for projects that develop and test new forms of health care delivery systems (e.g. health maintenance organisations). {:#subdebate-94-39} #### Pharmaceutical Services and Benefits {:#subdebate-94-40} #### Pharmaceutical Benefits - General and Pensioners Except for a flat charge per prescription payable other than by Pensioner Health Benefit (PHB) card holders and their dependants, the Commonwealth meets the costs of a wide range of drugs supplied on doctors' prescriptions. As announced in the Budget Speech, legislation is to be introduced to increase the flat charge from $2.50 to $2.75 per prescription, with effect from 1 September 1979. PHB card holders and their dependants are eligible for benefits without charge. The decision mentioned above to extend eligibility for PHB cards to supporting parents and their dependants, and to increase the basic income test limit, is estimated to cost $8 million in 1979-80 and S15.5 million in a full year. The Government has also decided to prune the list of pharmaceutical benefits with a view to achieving full-year savings of up to S20 million. These decisions, together with the changed medical insurance arrangements, are estimated to largely offset the effects of higher utilisation and cost increases on expenditure on general pharmaceutical benefits in 1979-80, which is estimated to increase by a net $4.8 million; expenditure on pharmaceutical benefits for eligible pensioners and their dependants is estimated to increase by $21.9 million. {:#subdebate-94-41} #### Pharmaceutical Benefits - Veterans and Dependants The Commonwealth meets the full cost of drug and medicinal prescriptions supplied on doctors' prescriptions for eligible veterans and their dependants. {:#subdebate-94-42} #### Nursing Home and Domiciliary Nursing Care Services and Benefits {:#subdebate-94-43} #### Nursing Home Benefits and Payments Under the *National Health Act,* benefits are paid by the Commonwealth for all patients in approved nursing homes who are not insured with a private hospital benefits fund. Current benefits are: The benefits, when combined with the statutory patient contribution, which is set at 87.5 per cent of the single pension rate plus supplementary assistance (currently $7.25 a day), were set at 1 November 1978 to cover fees charged in each State to 70 per cent of patients in non-government nursing homes approved under the *National Health Act.* The levels of benefit are to be reviewed during 1979-80 after a survey of nursing home fees. Under the *Nursing Homes Assistance Act* 1974 the Government meets approved operating deficits, after receipt of patient contributions and of benefits for patients insured in the standard hospital benefits table (or above), of eligible private non-profit nursing homes that participate in arrangements authorised by the Act. Reflecting a 12 per cent increase in bed days, the effects of higher benefits and an allowance for cost increases, expenditure on nursing home benefits is estimated to increase by $16.1 million in 1979-80 (to $216.2 million) while expenditure on the financing of deficits of eligible nursing homes is estimated to increase by $19.5 million (to $88.0 million). {:#subdebate-94-44} #### Domiciliary Nursing Care Benefits The Commonwealth pays a benefit of $2 a day to persons who provide adequate nursing care for eligible relatives at home as an alternative to institutional care. The relative must require professional nursing care to an extent that would otherwise justify admission to an approved nursing home. Legislation has been passed to reduce the age limit for eligibility under this scheme from 65 years to 16 years with effect from 1 November 1979. The cost of this extension is estimated at $1.3 million in 1979-80 and $2.0 million in a full year. {:#subdebate-94-45} #### Nursing Care for Veterans and Dependants The Commonwealth meets the full cost of nursing home accommodation required by veterans for service-related disabilities. It also meets the cost of nursing home care for disabilities not related to service for certain categories of veterans and war widows, subject to payment by the patient of the patient contribution prescribed for other nursing home patients in the community. Free domiciliary care services are provided to these groups as required. {:#subdebate-94-46} #### Home Nursing Services The Commonwealth extends subsidies, estimated to cost $12.0 million in 1979-80, to approved non-profit organisations providing home nursing services. The Commonwealth subsidy to any organisation is not to exceed that paid to the organisation by a State. The rate of subsidy was increased with effect from 1 July 1979. For organisations established before September 1956, the annual Commonwealth payment for each nurse who attracts a subsidy was increased from $10 200 to $10 800. For organisations established after that date, the annual subsidy for each nurse employed was increased from $5100 to $5400. These increases are estimated to cost $0.3 million in 1979-80. {:#subdebate-94-47} #### Community Health Facilities and Services Commonwealth assistance is provided to the States, Northern Territory, local government authorities and other eligible organisations for the provision of community-based health services. In 1979-80 an estimated $60.2 million, $6.0 million more than in 1978-79, will be provided for the following components of the program: $48.7 million for capital and operating costs of community health services in the States and the NT on a S for $ basis (projects covered include community health centres, day hospitals, community health teams and alcoholism and drug dependence centres); $3.5 million for capital (S for $ basis) and operating (S3 for $1 basis) costs of women's refuges; $1.0 million for the full cost of programs based on the recommendations of the Galbally Review of Post-Arrival Programs and Services for Migrants concerning ethnic health workers and interpreters and translators in health services*, $6.0 million for 'national' projects that have an Australia-wide application (eg The Family Medicine Program for the promotion of general medical practice and the funding of private national health and mental health organisations); and $0.9 million for health care planning and research in the form of grants to the States and the NT (on a $ for $ basis) and to institutions and persons. {:#subdebate-94-48} #### Treatment of Tuberculosis The provision here for 1979-80 is for the payment of allowances to persons (and their dependants) suffering from tuberculosis. The decrease of $0.1 million in 1979-80 reflects the transfer of responsibility for tuberculosis control measures in the NT to the Northern Territory Government. {:#subdebate-94-49} #### Dental Services for School Children In co-operation with the States, assistance is provided for an Australia-wide school dental scheme to provide a free dental service to all primary school children. The children receive comprehensive dental care at local school clinics at regular intervals by either a dentist or dental therapist, and the scheme emphasizes prevention and dental health education. To 30 June 1979, 10 training schools for dental therapists have been established and under the scheme 457 school clinics (static and mobile) provided, thereby adding substantially to the 166 clinics that were in operation before the scheme commenced in 1973. A further 110 clinics are expected to be completed in 1979-80. The Commonwealth will provide $23.3 million to the States and the Northern Territory in 1979-80 to meet 50 per cent of approved capital and operating costs of the Scheme. The increase of $5.2 million (29 per cent) reflects an increase of $6.3 million in recurrent expenditures and a decrease of $1.0 million in capital expenditures. Health Services in the Territories nec Outlays under this heading in 1978-79 relate to the Australian Capital Territory and to the Northern Territory for the six months to 31 December 1978, when responsibility for health services passed to the Northern Territory Government. In the ACT, the Commonwealth provides, or subsidises, health services of the type provided elsewhere by State and local government authorities. These include three hospitals (Calvary Hospital having opened in April 1979), public health activities, ambulance services, community health centres and nursing home and mental health facilities. Net expenditure by the Commonwealth under this heading in 1979-80 on recurrent and capital costs of health services in the ACT is estimated at $44.2 million, $1.4 million less than expenditure in 1978-79; this reflects the completion of some major projects. (A further $20.9 million - half the net operating costs of recognised hospitals in the ACT - is included under the heading Hospital Payments). The overall reduction of $32.3 million in 1979-80 mainly reflects the transfer of responsibility for health services in the NT. {:#subdebate-94-50} #### Health Services for Aboriginals The 1978-79 estimate includes expenditure to 31 December 1978 by the Department of Health on facilities and services for Aboriginals in the Northern Territory. Expenditures subsequent to that date relate to outlays by the Department of Aboriginal Affairs under its grants-in-aid program ($5.3 million in 1979-80, an increase of $0.4 million) and its State grants program ($13.4 million, an increase of $0.8 million). Under these programs, resources are provided for the prevention and control of alcohol abuse; to develop Aboriginals' responsibility for, and involvement in, the improvement of their own health through participation in the delivery of medical/health services; and the development, through training, of Aboriginal expertise in all aspects of health care. {:#subdebate-94-51} #### Other Health Services {:#subdebate-94-52} #### Medical Research Grants On the advice of the National Health and Medical Research Council, the Commonwealth provides assistance for medical research through the Medical Research Endowment Fund. Assistance is provided to Commonwealth and State Government departments, Universities and other institutions such as the Howard Florey Institute of Experimental Physiology and Medicine and the Walter and Eliza Hall Institute of Medical Research, as well as to individual research workers. An amount of $14.0 million, an increase of $0.8 million, is being provided in support of medical research programs in 1979-80. {:#subdebate-94-53} #### Commonwealth Serum Laboratories The Commonwealth Serum Laboratories Commission produces and sells biological products, undertakes research into the production of therapeutic biological products, and maintains stocks of biological products. The provision of $7.1 million for 1979-80 includes $5.0 million for CSL's capital works program, compared with $4.0 million in 1978-79. {:#subdebate-94-54} #### Medibank Private - Payment The outlay of $11 million in 1978-79 represented a 'once-only' grant to Medibank Private to enable it to undertake its future operations on a sound actuarial basis. {:#subdebate-94-55} #### Aids and Appliances The Commonwealth meets the cost of supplying hearing aids (and batteries) to children, eligible pensioners and supporting parents in receipt of an allowance from the Department of Social Security. This heading also reflects the costs of the supply to civilians of artificial limbs and stoma appliances. {:#subdebate-94-56} #### Isolated Patients Travel and Accommodation Assistance Scheme Under arrangements introduced with effect from 1 September 1978, the Commonwealth subsidises the travel and private accommodation costs of persons (and, if necessary, escorts/attendants) living in remote areas who are referred by a medical practitioner for specialist medical attention that is available only at a distance of more than 200 kilometres. For each eligible person the Commonwealth meets approved travel costs in excess of $20 per return journey and accommodation costs up to $15 per night for each approved stay. Eligibility criteria under the scheme were liberalised in certain respects with effect from 14 June 1979; this liberalisation and the full year cost in 1979-80 explain the increase of $0.8 million. {:#subdebate-94-57} #### National Health Promotion Program In 1979-80 the Government will develop and test a program designed to improve the general level of health in Australia by promoting health as an enjoyable concept. The test program will seek to persuade people to adopt healthier lifestyles and to see their health as a valuable asset for which they personally are largely responsible. {:#subdebate-94-58} #### Educational Campaigns Assistance is provided to support State and national programs of education directed against the abuse of narcotics and other drugs of addiction through the National Drug Education Program. The 1979-80 allocation for existing State and national projects has been increased by $286,000 to $1.45 million. A media campaign to promote the Program and the development of national guidelines as part of an overall approach to health education are to continue in 1979-80. The Northern Territory is also to participate in the program in 1979-80. {:#subdebate-94-59} #### Blood Transfusion Service and Products The annual operating costs of the Red Cross Society's Blood Transfusion Service in the States are shared by the States (60 per cent), the Society (the lower of 5 per cent of operating costs or 10 per cent of its previous year's income from donations) and the Commonwealth (the balance). In the Northern Territory the Commonwealth provides assistance in accordance with a similar principle. Since 1 January 1979 the Northern Territory has been responsible for its share of the annual operating costs. Blood collected by the Transfusion Service is processed by the Commonwealth Serum Laboratories Commission and blood products are supplied, free of charge, to hospitals and approved pathologists for use in medical treatment and analysis. The Commonwealth reimburses the Commission for the cost of processing the blood. The Commonwealth contributions are estimated to increase by $0.7 million in 1979-80 to $11.6 million. {:#subdebate-94-60} #### Quarantine Services Human, animal and plant quarantine measures are enforced to prevent the introduction of exotic diseases into Australia. By arrangement, the States and, from 1979-80, the Northern Territory administer animal and plant quarantine operations in their respective areas and the costs they incur on the Commonwealth's behalf are reimbursed. Human quarantine is administered by the Commonwealth. The estimated $11.9 million increase in net outlays for quarantine services in 1979-80 reflects, in addition to general cost increases, the following factors: financial adjustments in respect of the 1978-79 reimbursements to the States ($0.8 million); the cost of animal and plant quarantine in the NT from 1 July 1979 ($0.7 million); the net cost of new arrangements expected to commence in 1979-80 for funding of quarantine disposal at seaports ($0.7 million); the quarantine component of coastal surveillance in Northern Australia ($3.8 million); increased expenditure on the construction of the Fairfield Infectious Diseases Hospital ($0.9 million); and increased expenditure on the construction of animal quarantine stations at Cocos (Keeling) Island and at Wallgrove, NSW ($3.2 million). {:#subdebate-94-61} #### Other This category includes the Commonwealth subsidy of $3.2 million to the Royal Flying Doctor Service, grants to the States for the Australian Encephalitis Eradication Campaign and expenditure related to the administration of public health and the Therapeutic Goods Act. {:#subdebate-94-62} #### General Administrative Expenditure Expenditure under this heading comprises the general administrative and capital expenses of the bulk of the Department of Health, including the administration of payment of Commonwealth medical benefits transferred from the Health Insurance Commission from 1- November 1978. The winding up of the former general functions of the Commission, which were funded through the Budget, is estimated to result in reduced outlays in 1979-80 of $24.9 million (after providing for estimated carry-over expenses this year of $2.4 million). This reduction more than offsets the full-year effect in 1979-80 of salary and other known cost increases of $7.1 million. {:#subdebate-94-63} #### Recoveries Recoveries shown here are in respect of charges met by certain countries for treatment given to their veterans through Repatriation facilities; charges made on departments and authorities for the use of the Department of Health's computer facilities; and other miscellaneous receipts. {: type="1" start="4"} 0. SOCIAL SECURITY AND WELFARE The Australian social security system is intended to protect people from economic hardship caused by events such as loss of earnings through age, invalidity, sickness, unemployment or the loss or absence of a supporting spouse as a result of death, desertion or long-term separation. It is designed also to compensate veterans for service-related disabilities and the dependants of those whose deaths are service-related and to assist parents with the expenses associated with raising children. Much of this assistance is provided by way of cash benefits. There are selective, or income tested, benefits such as invalid and widows' pensions and unemployment benefits, as well as universal benefits such as handicapped child's allowance. In addition, assistance is provided, either directly or through State and local government authorities and voluntary agencies, for a wide range of welfare services for people with special needs. The aged, for example, are assisted with their accommodation needs and invalids may be trained so that they can re-enter paid employment. Assistance is provided in a variety of forms for the advancement of Aboriginals. Total direct outlays on social security and welfare are estimated to increase by $781.1 million (9.6 per cent) in 1979-80 to $8924.9 million, which is equivalent to 28.2 per cent of estimated total Budget outlays. {: type="a" start="a"} 0. Grants to the States for pensioner housing in 1978-79 and 1979-80, and similar payments to the Northern Territory in 1979-80 are shown under the Housing function. Assistance to the Aged {:#subdebate-94-64} #### Pensions and Allowances Age pensions are payable, subject to an income test, to residentially qualified women aged 60 to 69 years and to residentially qualified men aged 65 to 69 years. Residentially qualified men and women aged 70 years and over receive a base rate of pension free of income test; since November 1978, increases in pension resulting from the automatic indexation of pension rates have been paid subject to income test. To be residentially qualified for age pension, a period of 10 years residence in Australia is usually necessary. Wife's pension is payable to an age pensioner's wife who does not qualify for an age, invalid or repatriation service pension in her own right. The pension is subject to an income test. Additional payments of$7.50 a week for each child are available to pensioners with dependent children. These payments are subject to an income test. Supplementary assistance of up to$5 a week is payable, subject to a special income test, to pensioners who pay rent or lodging charges. Generally the amount of supplementary assistance payable is not to exceed the actual amount paid for rent or lodgings. Upon the death of one of a married pensioner couple, the surviving member becomes entitled to receive, for up to six fortnightly instalments, the equivalent of the two pensions that would have been paid had the spouse not died. The basic levels of the relevant pensions and benefits are adjusted automatically for movements in the Consumer Price Index (CPI). They were last adjusted in November 1978. The Government has decided to amend the Social Services Act to restore twice-yearly automatic indexation of pensions and benefits. The pension increases in November 1979 and May 1980 will be based on the percentage increase in the CPI between the June 1978 and June 1979 quarters and the June 1979 and December 1979 quarters, respectively. The existing maximum rates of pensions and additional payments, and the rates to apply from November 1979, are set out below: The estimated cost of the proposed increase in the rates of age pensions in November 1979 and May 1980 is $193.1 million in 1979-80 and $448.0 million in a full year. At 30 June 1979 there were 1 323 000 age pensioners (including wives of age pensioners in receipt of a wife's pension) and during 1979-80 the number is estimated to increase by 32 000 to 1 355 000. The average amount of age pension (including additions for children and supplementary assistance) is estimated to rise from $47.49 a week in 1978-79 to $50.63 a week in 1979-80, an increase of 6.6 per cent. The main reasons for this are increases in pension rates in line with the CPI and the full-year effects of increased rates of pension introduced in November 1978. {:#subdebate-94-65} #### Aged Persons' Accommodation Under the *Aged and Disabled Persons Homes Act* 1954, organisations are assisted to provide suitable homes in which aged people may live in conditions approaching ordinary domestic life. Grants on a $2 for $1 basis may be made to religious and charitable organisations and local government bodies to meet the cost of erection, extension or purchase of homes for the aged. The maximum subsidy limits under the Act are $12 100 for a single unit and $14 035 for a double unit, plus a maximum of $1920 a unit for land. Totally and permanently incapacitated adults may also be accommodated in subsidised homes. Expenditure on the provision of homes is estimated at $30.9 million in 1979-80 compared with $24.7 million in 1978-79. The *Aged Persons Hostels Act* 1972 is designed to encourage the provision of hostel accommodation for the aged. Subject to certain conditions, the Commonwealth meets the cost of additional hostel accommodation provided by eligible organisations up to a maximum of $18 150 a person. The Commonwealth also pays an additional grant of up to $2400 a person for the purchase of land; a further $250 a person is available for furnishings. Accommodation provided under the Act must be allocated strictly on the basis of need and without any contribution from the prospective resident. Expenditure under the Act is estimated at $31.6 million in 1979-80 compared with $28.1 million in 1978-79. The total of $62.5 million provided under both Acts is the amount required to fund the balance of existing approved projects. Under the *Aged or Disabled Persons Homes Act* 1954, the Commonwealth also pays a personal care subsidy pf $15 a week to eligible organisations for persons aged 80 years or over and other residents who require, and are receiving, approved personal care while living in hostel-type accommodation provided by those organisations. Expenditure on the personal care subsidy is estimated to rise from $13.4 million in 1978-79 to $14.1 million in 1979-80 as a result of an expected increase in the number of persons who will qualify for the subsidy. Between the years 1969-70 and 1977-78 the Commonwealth provided grants to the States to assist with the provision of self-contained accommodation at reasonable rentals for certain categories of single aged and service pensioners. In 1978-79 this assistance continued, with wider eligibility criteria, under the *Housing Assistance Act* 1978. Assistance under the Act has been further extended in 1 979-80 to persons other than pensioners and it has been decided to reclassify grants for pensioner accommodation since 1978-79 under the functional heading Housing'. {:#subdebate-94-66} #### Home Care Services Under the *States Grants (Home Care) Act* 1969, and the *States Grants (Paramedical Services) Act* 1969, the Commonwealth provides funds, in association with the States, for the provision of a range of home care services, mainly for aged persons, and for the provision of senior citizens' centres. Under the *States Grants (Home Care) Act* 1969, the Commonwealth shares on a $1 for $1 basis with the States the cost of approved housekeeping or other domestic assistance provided wholly or mainly for aged persons in their homes. The Commonwealth also shares with the States, on a $2 for $1 basis, up to a maximum of two-thirds of the capital cost of approved senior citizens' centres and, on a $1 for $1 basis the cost of the salary of a welfare officer employed in conjunction with such a centre. Grants towards the cost of approved housekeeping and other domestic assistance for aged persons in their homes are estimated to rise from $8.6 million in 1978- 79 to $9.2 million in 1979-80 because of the expansion of existing approved services. Grants towards the cost of the salary of a welfare officer employed in conjunction with a senior citizens' centre are estimated to rise from $0.8 million in 1978-79 to $1.1 million in 1979-80 because of the effect of salary increases awarded in 1978-79 and higher utilisation of approved positions. An amount of $4 million is being provided in 1979-80 for grants to cover the capital cost of approved senior citizens' centres, an increase of $0.9 million on expenditure in 1978-79. Under the *States Grants (Paramedical Services) Act* 1969, the Commonwealth shares, on a $1 for $1 basis with the States, the cost of approved paramedical services provided wholly or mainly for aged persons in their homes. Grants in 1979- 80 are estimated at $0.9 million. The *Delivered Meals Subsidy Act* 1970 is designed to assist the establishment, expansion, improvement or maintenance of approved meals on wheels services. The basic rate of subsidy is 25 cents a meal. An additional subsidy of 5 cents a meal is payable if the organisation undertakes to include with each meal approved kinds and quantities of fresh fruit or fruit juices. Expenditure under the Act in 1979-80 is estimated at $2.5 million, compared with $2.3 million in 1978-79, as a result of an expected rise in the number of meals to be supplied. Assistance to Veterans and their Dependants {:#subdebate-94-67} #### Disability Pensions and Allowances Disability pensions and allowances (and certain other benefits including medical treatment) are available to certain veterans and their dependants. The term 'veteran' includes any man or woman eligible for consideration under the *Repatriation Act* 1920 or associated Acts by virtue of service in the Australian armed forces. The term 'service' includes service in the 1914-18 War, the 1939-45 War, the Korea-Malaya Operations, the Far East Strategic Reserve, special service in South East Asia (including Vietnam), and service with the Defence Force on or after 7 December 1972. Basic eligibility varies according to the nature of service. Broadly, for those with 'active service', incapacity or death resulting from 'any occurrence' during service may be accepted. For those with 'home service', however, the criterion is narrower, in that incapacity or death must have arisen out of, or be attributable to, that service. Incapacity or death arising from a condition existing prior to enlistment may be accepted if aggravated or contributed to by the conditions of service. {:#subdebate-94-68} #### Classes of Disability Pensions Pensions are paid to eligible veterans in three main categories: The Special Rate (known as the T & PI) Pension, payable to a veteran who, as a result of service, is blinded, or is totally and permanently incapacitated so that he is unable to earn more than a negligible percentage of a living wage; The Intermediate Rate, payable to a veteran who, because of the severity of his incapacity accepted as related to service, can work only part-time or intermittently, and in consequence is unable to earn a living wage; and The General Rate, payable to a veteran who has an incapacity accepted as related to service, but who is still able to work full-time although under difficulty. The amounts payable range from 10 per cent to 100 per cent of the maximum General Rate, according to the assessed degree of incapacity. Pensions are also paid to the wives of incapacitated veterans and to their children. Such pensions are paid at rates varying with the assessed degree of the particular veteran's incapacity. When the death of a veteran has been accepted as related to his service, his widow qualifies for the war widows' rate of pension and for associated benefits, while his children each receive pensions at 'orphan' rates and other benefits. If a veteran's death has not been accepted as related to service, but at the time of death he was receiving or is later adjudged to have been eligible to receive, a pension at the Special Rate or as a double amputee, his dependants qualify for pensions as if his death had been accepted as related to service. Other dependants of deceased veterans may qualify for pensions in certain circumstances. {:#subdebate-94-69} #### Allowances Various allowances are provided to supplement disability pensions. These allowances vary according to the type or severity of disablement and the special needs of the pensioners. {:#subdebate-94-70} #### Rates of Pensions and Allowances The Special, Intermediate and General Rate disability pensions and the war and defence widow pensions were automatically adjusted in November 1978 in line with movements in the CPI. The Government has decided to amend the Repatriation legislation to restore twice-yearly automatic indexation of pensions, each May and November. The Government has also decided to increase rates of war orphans' pensions; details are set out in the table below. Subsistence and travel expenses are payable to eligible veterans and dependants who must travel for departmental purposes. The Government has decided to increase the rates of these allowances to those payable to Third and Fourth Division officers of the Commonwealth Public Service. Restrictions on rail travel will be lifted to permit veterans and dependants to travel first class for authorised treatment and pension and medical reviews. In addition, benefit rates are to be increased for a number of other minor benefits, including attendants' allowances and funeral benefits; details are set out below. The existing and proposed rates of the main disability pensions and allowances are shown in the following table: A Loss of Earnings Allowance (which replaced Sustenance Allowance) is paid to veterans who have suffered a loss of earnings during the investigation of a claim or while receiving medical treatment for a service-related disability. The allowance is paid at a rate not exceeding the Special Rate pension less any pension in payment at the time, or the actual loss of earnings, whichever is lower. The proposed increases in the rates of disability pensions in November 1979 and May 1980 are estimated to cost $27.1 million in 1979-80 and $56.1 million in a full year. The other increases in benefits and allowances mentioned above are estimated to cost $1.9 million in 1979-80 and $2.5 million in a full year. During 1978-79 the average number of veterans and their dependants in receipt of disability pensions was 457 500; in 1979-80 the number is estimated to be 443 000. The effect on expenditure of this estimated decline in numbers is more than offset by the full year effects of increased rates of benefits introduced in 1978-79 and the increases in benefit rates in November 1979 and May 1980 in line with movements in the CPI. {:#subdebate-94-71} #### Service Pensions Service pensions may be payable to: a male veteran who served in a theatre of war and who has attained the age of 60 years or is permanently unemployable; a female veteran who served in a theatre of war or embarked for service abroad and has attained the age of 55 years or is permanently unemployable; ex-members of the Defence Forces of British Commonwealth countries who satisfy the above criteria, who served in a theatre of war and have at least ten years residence in Australia. The Government has decided to extend eligibility for service pension, with effect from February 1980, to veterans who: served as members of formally raised Armed Forces of Allied countries in any war or war-like operation in which Australia participated; served in a theatre of war; have not served at any time in the forces of a country which was at the time at war with Australia; and meet the residential qualifications which apply to members of the forces of a Commonwealth country. Service in a 'theatre of war' means, in respect of the 1914-18 War or 1939-45 War, service 'at sea, in the field or in the air in naval, military or aerial operations against the enemy in an area, or on an aircraft or ship of war, at a time when danger from hostile forces of the enemy was incurred in that area or on that aircraft or ship of war . . . ' In respect of certain later service, 'service in an operational area' and 'special service' as defined are the qualifications equivalent to service in a 'theatre of war'. A service pension is the broad equivalent of an age or invalid pension. The advantages to the veteran are availability of the service pension five years earlier and, in certain circumstances, eligibility for a wide range of repatriation medical treatment services. Service pensioners are eligible for the same range of pensions and allowances as age pensioners and the rates of benefits are the same. Like age pensions, service pensions will be increased in November 1979 and in May 1980 in line with movements in the CPI. Service pension is paid, subject to income test, to eligible veterans under the age of 70 years. A basic rate (that payable as at 1 November 1978) of service pension, not subject to automatic indexation, is paid, free of income test, to eligible veterans aged 70 years and over. Increases in the rate of service pension as a result of automatic indexation are paid in the form of an income-tested supplement. For eligible veterans under 70 years of age and in the assessment of the income-tested supplement for veterans aged 70 years and over, 50 per cent of any disability pension received is disregarded as income for service pension income test purposes. With this exception, service pensions are subject to the same income test arrangements as social security pensions. During 1978-79 the average number of service pensioners (including wives) was 199 555; this number is estimated to rise to 224 000 in 1979-80. Increased expenditure in 1979-80 reflects this increase in numbers, the full-year effect of pension increases granted in November 1978 and the increased rates to apply in 1979-80. The proposed increase in the rates of service pensions in November 1979 and May 1980 is estimated to cost $39.6 million in 1979-80 and $93.2 million in a full year. Assistance to the Handicapped {:#subdebate-94-72} #### Invalid Pensions and Allowances Invalid pensions are payable to persons not less than 16 years of age who are permanently incapacitated for work to the extent of at least 85 per cent or are permanently blind. Pensions are subject to an income test except in the case of people who are permanently blind. If the incapacity or blindness occurred outside Australia, the residence qualification is the same as for an age pension. Invalid pensioners are eligible for the same additional payments as age pensioners and the rates of payment are the same. Similarly, wife's pension is payable, subject to income test, to the wife of an invalid pensioner if she is not eligible for an age, invalid or service pension in her own right. At 30 June 1979 there were 276 000 invalid pensioners (including wives of invalid pensioners in receipt of wife's pension) and during 1979-80 the number is estimated to increase by 22 000 to 298 000. The average amount of invalid pension (including additions for children and supplementary assistance) is estimated to rise from $48.91 a week in 1978-79 to $52.56 a week in 1979-80, an increase of 7.5 per cent. The main reasons for this are the proposed increase in pension rates in November 1979 and May 1980 in line with the CPI and the full-year effects of increased rates of pension introduced during 1978-79. The estimated cost of the increase in rates of invalid pension in November 1979 and May 1980 is $49.8 million in 1979-80 and $115.6 million in a full year. {:#subdebate-94-73} #### Sheltered Employment Allowances Sheltered employment allowances are payable to disabled people engaged in approved sheltered employment who are qualified to receive an invalid pension or who would become so qualified if they ceased to be provided with sheltered employment. The allowance is subject to the same income test as applies to the invalid pension and the rates of payment are generally the same. An incentive allowance of $5 a week is paid (free of income test) to the recipients of sheltered employment allowance. Recipients of the sheltered employment allowance are not eligible for supplementary assistance. {:#subdebate-94-74} #### Handicapped Children's Benefits and Allowances A handicapped child's allowance of $15 a week is payable to parents or guardians in respect of a child under the age of 16 years who is cared for at home and who, because of the severity of the handicap, is in need of constant care and attention and in respect of full-time student children aged 16 to 25 years except in cases where the child is in receipt of an invalid pension. Subject to the discretion of the Director-General, a handicapped child's allowance is also payable, wholly or in part, where a person has the custody, care and control of a substantially handicapped child and, as a consequence of continuing substantive expenditure associated with the child's disability, the person suffers financial hardship. Handicapped child's allowance is paid on a monthly basis at the rate of $65 a month. The number of recipients at 30 June 1979 was 23 700 and this number is expected to increase to 26 000 by 30 June 1980. Expenditure is estimated to rise from $16.5 million in 1978-79 to $18.5 million in 1979-80 as a result of the increased numbers expected to qualify for the allowance. The Commonwealth pays a handicapped children's benefit of $5 a day, for each child under 16 years of age, to non-profit organisations and local governing bodies conducting approved homes providing accommodation and care for mentally and physically handicapped children. The benefit continues to be paid to an eligible organisation when a child is absent from the institution for a short period only such as a week-end home visit. Expenditure is estimated to increase from $1.7 million in 1978-79 to $2.0 million in 1979-80 in line with an expected increase in the number of organisations becoming eligible for subsidy. {:#subdebate-94-75} #### Handicapped Persons' Facilities Under the *Handicapped Persons Assistance Act* 1974, the Commonwealth provides subsidies on a $4 for $ 1 basis to non-profit organisations and local governing bodies for the purchase, construction, extension, alteration, rental and maintenance of premises that cater for physically or mentally handicapped people. Services qualifying for subsidy comprise day training centres for handicapped children, activity therapy centres, training centres and sheltered workshops for handicapped adults and residential facilities for people who use these services. Residential facilities for people who, because of a disability, need special accommodation to allow them to engage in normal outside employment also qualify for subsidy. Subsidies on a $4 for $1 basis are available also for the cost of furnishing and equipping the various types of centres, while assistance with operating costs may be provided by means of staff salary subsidies. The latter are usually on a $ for $ basis although a higher proportion, up to 100 per cent, may be paid for the first two years of operation of some new projects. A training fee of $500 is paid to eligible sheltered workshops for each former employee who, after completing more than six months sheltered employment, graduates to and retains employment for 12 months or more. {:#subdebate-94-76} #### Rehabilitation Services The Commonwealth Rehabilitation Service attempts to restore disabled persons to their fullest physical, mental, social and vocational usefulness. Treatment and training are provided free to persons if there is a reasonable prospect of their being able to undertake full-time, part-time or sheltered employment or household duties or of their becoming capable of leading an independent or semi-independent life at home. The following broad categories are accepted for rehabilitation: pensioners and claimants for pension who would be likely to derive substantial benefit from that treatment and training; beneficiaries and claimants for benefit who, without that treatment and training, would be likely to become unemployable; persons being paid allowances under section 9 of the *Tuberculosis Act* 1948 and who would be likely to derive substantial benefit from that treatment and training; persons of 14 or 15 years who, without treatment and training would be likely to become qualified to receive invalid pension on attaining the age of 16 years; and any other persons between the age of 16 and 65 (men) or 16 and 60 (women) who would be likely to derive substantial benefit from that treatment and training. Persons who do not fall within these eligibility criteria may be accepted for rehabilitation on a paying basis. Expenditure is estimated to rise from $18.2 million in 1978-79 to $20.1 million in 1979-80 as a result of an expected increase in the numbers to be accepted for treatment and training, price and salary increases and the first full year of operation of the new Townsville centre opened during 1978-79. Provision is also made for the Commonwealth's share of the costs of establishing and operating a rehabilitation centre for handicapped persons in Hobart jointly with the Tasmanian Government. {:#subdebate-94-77} #### Assistance to Widows and Single Parents {:#subdebate-94-78} #### Widows' Pensions and Allowances Pensions are payable to widows subject to an income test. No period of residence is necessary if a woman and her husband were residing permanently in Australia when she became a widow. In other cases, there is a residence qualification of either 5 years immediately prior to claiming a pension or 10 years continuous residence in Australia at any time. There are three classes of widows' pension: Class A - a widow with one or more qualifying children in her care; Class B - a widow without qualifying children who is at least 50 years of age or at least 45 years of age if her Class A pension ceased after she reached that age because she no longer had a qualifying child in her care; and Class C - a widow without qualifying children who is in necessitous circumstances within 26 weeks of her husband's death. For all classes, the term 'widow' includes a woman who was the common-law wife of a man for at least three years immediately before his death. For Class A and B, it includes a wife who has been deserted for six months, a divorcee, a woman whose husband has been imprisoned for six months and a woman whose husband is in a mental hospital. Widow pensioners may be eligible for supplementary assistance, additional pension for dependent children and mothers' allowance in lieu of guardians' allowance at the same rates as age and invalid pensioners. These payments are subject to an income test. At 30 June 1979 there were 161 000 widow pensioners and during 1979-80 the number is estimated to increase by 11 000 to 172 000. The average rate of pension (including additions for children and supplementary assistance) is estimated to rise from $60.99 a week in 1978-79 to $65.15 a week in 1979-80, an increase of 6.8 per cent. The estimated cost of the increase in the rates of widows' pensions in November 1979 and May 1980 is $31.6 million in 1979-80 and $73.3 million in a full year. {:#subdebate-94-79} #### Supporting Parents' Benefits and Allowances A supporting parents' benefit is paid to unmarried mothers and mothers who are separated wives or de facto wives and de facto wives of prisoners or of mental hospital patients. In the case of unmarried mothers, benefit becomes payable six months after the child's birth and, in other cases, from six months after the event which gives rise to eligibility (e.g. separation) provided a child is six months old. Supporting parents' benefit is paid immediately to a widowed father, an unmarried father, a father whose de facto wife dies or a divorced father, provided a child is six months old. It is payable to separated husbands and de facto husbands and to husbands and de facto husbands of prisoners or mental hospital patients after six months from the date of the event which gives rise to eligibility provided a child is six months old. The benefit is payable at the same rate and subject to similar conditions as the Class A widows' pension. Supporting parents may also be eligible for supplementary assistance, additional benefit for dependent children and guardians' allowance and, as announced in the Budget, will become eligible for Pensioner Health Benefit Cards subject to income test. At 30 June 1979, there were 62 500 supporting parent beneficiaries and during 1979-80 the number is estimated to increase by 5500 to 68 000. The average rate of benefit (including additions for children and supplementary assistance) is estimated to rise from $70.43 a week in 1978-79 to $74.62 a week in 1979-80, an increase of 5.9 per cent. The estimated cost of the increase in the rates of supporting parents' benefit in November 1979 and May 1980 is $12.4 million in 1979-80 and $28.8 million in a full year. {:#subdebate-94-80} #### Other Under the *States Grants (Deserted Wives) Act* 1968, the Commonwealth shares, up to certain limits, on a $1 for $1 basis with the States the cost of helping mothers of families without a breadwinner where the mothers are ineligible for a Class A widows' pension or a supporting parents' benefit. Assistance is provided during the first six months after the date of the event which gives rise to eligibility (e.g. the birth of a child or separation). The main groups of mothers assisted are deserted wives, deserting wives, separated wives, wives of prisoners and unmarried mothers. After the first six months, these groups of mothers may qualify for either a Class A widows' pension or a supporting parents' benefit. Under separate arrangements, the Commonwealth now shares these costs with the Northern Territory on a similar basis. Expenditure is estimated to rise from $26.1 million in 1978-79 to $28.2 million in 1979-80 due to a small expected increase in numbers and the full year effect of rate increases during 1978-79. {:#subdebate-94-81} #### Assistance to Families {:#subdebate-94-82} #### Family Allowances Family allowances are payable to people with children under 16 years of age or dependent children 16 years but under 25 years of age and receiving fulltime education at a school, college or university and not in employment. Allowances are usually paid to the mother. Family allowance, orphans' pension, handicapped child's allowance and additional pension/benefit for a child are not payable outside Australia except where the child is: temporarily abroad; living abroad pending migration to Australia (within 4 years) ; and living abroad with a person receiving an Australian pension or benefit - that person will be entitled to payment of additional pension/benefit for a child, but not family allowance. Parents of children receiving student allowances under the Tertiary Education Assistance Scheme and other related scholarship schemes are not eligible for family allowances but appropriate adjustments are made to student allowances so that families of tertiary students receive broadly the same base payments. Children receiving invalid pension are not eligible for family allowances. The rates of family allowance are: At 30 June 1979, there were 4 231 000 children (including student children and children in institutions) covered by the allowances and the number is estimated to decrease to 4 220 000 by 30 June 1980. Outlays are estimated to decrease from $997.6 million in 1978-79 to $978.0 million in 1979-80. {:#subdebate-94-83} #### Maternity Allowance Maternity allowance was payable, as a lump sum, to mothers in respect of children born on or before 31 October 1978. Maternity allowances cost $3.2 million in 1978-79. Payments in 1979-80 in respect of outstanding claims for eligible births are estimated at $10 000. {:#subdebate-94-84} #### Children's Services The Commonwealth provides capital and recurrent assistance for services for children and their families, including a block grant to the States to assist in meeting the costs of pre-school education. Total expenditure on children's services is estimated at $69.3 million in 1979-80, compared with $63.8 million in 1978-79. The Government has decided that $32.75 million of the 1979-80 total will be paid to the States as a contribution towards the costs of pre-school education. In addition, an amount of $340 000 will be provided to the Northern Territory for the first time for pre-school purposes. Expenditure on children's services other than pre-schools (e.g. day care, vacation care) is estimated at $36.1 million in 1979-80, an increase of S5.1 million over 1978-79. {:#subdebate-94-85} #### Other The Government has provided $2.45 million in 1979-80 for grants to approved marriage guidance organisations and pre-marital education organisations, $155 000 for establishment and running expenses of the Institute of Family Studies established under the *Family Law Act* 1975 and $0.75 million for the provision of family planning facilities and the training of medical personnel. An orphan's pension of $47.70 a month is payable, free of income test, to the guardian of a child under 16 years of age or a full-time student over 16 but under 25 years of age. It is paid in respect of a child, both of whose parents are dead, or one of whose parents is dead and the whereabouts of the other is unknown, or in respect of a child whose sole surviving parent or adoptive parent is in prison or in a mental hospital. Orphans' pension is not payable in respect of a person who is receiving an invalid pension. Expenditure is estimated at $2.1 million in 1979-80, compared with $1.9 million in 1978-79; the increase reflects the expected rise in the numbers becoming eligible. Assistance to the Unemployed and Sick {:#subdebate-94-86} #### Unemployment Benefits {:#subdebate-94-87} #### Sickness and Special Benefits Unemployment and sickness benefits are available, subject to an income test, to persons who are unemployed and to persons who are temporarily incapacitated for work and have thereby lost income, respectively. A special benefit may be paid to persons ineligible for a pension or for an unemployment or sickness benefit if they are unable to earn a sufficient livelihood for themselves and their dependants. To be eligible for unemployment or sickness benefit, a person must be at least 16 years of age and under 60 (females) or under 65 years (males). The person must also have lived in Australia for at least a year immediately prior to claiming benefit or intend to remain here permanently. The basic rates of benefit are generally the same as for age and invalid pensions except for single people under 18 years of age and people without dependants. Single people under 18 years of age are eligible for a maximum payment of $36 a week, while people without dependants are eligible for a maximum payment of $51.45 a week. In both cases the benefit is not subject to the automatic indexation provisions for increases in the CPI. Single people under 18 years are eligible for additional benefit for each dependent child. After receiving benefits for six consecutive weeks, sickness beneficiaries become eligible, subject to a special income test, to receive supplementary allowance of up to $5 a week if they pay rent. This allowance is not payable to beneficiaries in hospital who have no dependants. The cost of the increase in the rates of unemployment, sickness and special benefits in November 1979 and May 1980 is estimated at $22.6 million for unemployment benefits and $9.0 million for sickness and special benefits in 1979-80 and at $52.0 million and $20.5 million respectively in a full year. The average number of unemployment beneficiaries underlying the 1979-80 estimate is 325 000 which compares with 306 000 in 1978-79; for sickness and special benefits the average number of beneficiaries is estimated to rise from 46 000 in 1978-79 to 48 000 in 1979-80. {:#subdebate-94-88} #### Unemployment Relief {:#subdebate-94-89} #### Community Youth Support Scheme The Community Youth Support Scheme (CYSS) was introduced in November 1976 to assist young unemployed persons registered with the Commonwealth Employment Service. The aim of CYSS is to improve the employability of the unemployed young and to maintain an orientation towards work. Under the Scheme financial assistance is provided to community groups, including recognised youth organisations and local government authorities, to meet the administrative and operating costs of the projects conducted by those bodies to assist the unemployed young. An allowance of up to $6 a week may be paid to participants to meet fares and incidental expenses, this allowance being additional to unemployment benefit received by participants. Expenditure under CYSS in 1978-79 amounted to $10.7 million; $10.0 million has been provided for 1979-80. {:#subdebate-94-90} #### Fraser Island Following its decision to cease granting export licences for minerals from sand mining on Fraser Island, the Commonwealth agreed to provide $10 million to Queensland for allocation by that State to create employment opportunities in the Maryborough region. An amount of $1 million was provided in 1976-77 and $3 million was provided in each of 1977-78 and 1978-79. It is intended to provide the remaining $3 million in 1979-80. {:#subdebate-94-91} #### Relocation Assistance Scheme The Relocation Assistance Scheme helps overcome the difficulties of unemployed persons who are unable to secure continuing employment in their present locality and are without prospects of doing so, even with re-training. Assistance is made available to enable eligible persons to move to another locality to take up either employment or training under NEAT leading to employment. Assistance is provided for fares and for other costs incurred by unemployed workers and their families changing their place of permanent residence, including removal expenses of $750 (maximum), re-establishment costs (related to family size), legal and agents' fees of $1000 (maximum) or rental allowances of $500 (maximum). The Scheme is estimated to provide assistance for about 1300 relocations at a cost of $1.3 million in 1979-80, an increase of $0.2 million on 1978-79. {:#subdebate-94-92} #### Other Welfare Programs {:#subdebate-94-93} #### Funeral Benefits *A* funeral benefit of up to $20 is payable to any person liable for the funeral costs of an age or invalid pensioner. A higher benefit of up to $40 is payable to an age, invalid or widow pensioner (including a person in receipt of supporting parents' benefit) liable for the funeral costs of a spouse, a child or another such pensioner. For these benefits, 'pensioner' means a person who satisfies, or had satisfied, the Commonwealth pensioner 'fringe' benefits income test. Expenditure is expected to remain steady at $1.5 million in 1979-80. {:#subdebate-94-94} #### Telephone Rental and Postal Concessions Pensioners and recipients of some other benefits who meet certain requirements, including, in most cases, a special income test, may be eligible for mail redirection concessions and a reduction of one-third in the basic annual rental for a telephone. Expenditure on these concessions to social security and repatriation pensioners is expected to rise from $16.8 million in 1978-79 to $18.2 million in 1979-80 as a result of an expected increase in the number of eligible persons receiving the concessions. {:#subdebate-94-95} #### Assistance to Homeless Men and Women The *Homeless Persons Assistance Act* 1974 provides for the payment of capital grants to voluntary agencies and to local authorities for approved projects (such as night shelters, reception centres and hostels) in order to upgrade and replace inadequate existing accommodation and to build new facilities for homeless persons. It also provides payment of a salary subsidy of 50 per cent of the salary of approved staff, an accommodation subsidy of 75 cents a person a day and a meal subsidy of 25 cents a meal in respect of non-resident homeless persons. The Act initially was to operate for a three year period but is to be extended until June 1980, by which time the Government is expected to have considered and made decisions on the long-term arrangements for the chronically homeless. Expenditure in 1979-80 is estimated to be $5.6 million, compared with $2.8 million in 1978-79. The estimated increase of $2.9 million primarily arises from the funding in 1979-80 of two major capital projects delayed from 1978-79. {:#subdebate-94-96} #### Assistance for Migrants In line with the recommendations of the *Review of Post Arrival Programs and Services for Migrants,* additional funds are being provided in 1979-80 for improving services to migrants. Expenditure on Migrant Resource and Information Centres will rise from $160 000 in 1978-79 to $1.0 million in 1979-80 to establish and operate new centres in the States. Grants to enable community agencies to provide for the employment of social workers and undertake minor projects will increase from $1.1 million to $1.7 million. An amount of $1.4 million has been provided for translating and interpreting services, including some to be operated by the States; $0.5 million has been provided to reimburse voluntary agencies for clothing and essentials supplied to refugees; and an additional $0.2 million contributed to a loan fund established in 1978-79 to enable voluntary agencies to assist Indo-Chinese refugees settle in private accommodation. Overall provision towards these activities has increased from $3.6 million in 1978-79 to $5.1 million in 1979-80. *Welfare Programs in the Australian Capital Territory* The Commonwealth provides welfare benefits and subsidies to ACT residents on a similar basis to those paid by State Governments. It is estimated that $7.5 million will be provided for these purposes in 1979-80, an increase of $1.5 million on 1978-79, which mainly reflects a projected higher number of eligible beneficiaries. Outlays in 1977-78 included $1.1 million expenditure in the Northern Territory but from 1978-79 these functions have been the responsibility of the Northern Territory Government. {:#subdebate-94-97} #### Other The Government reimburses the Australian National Railways for providing non-commercial concessional fares, mainly to pensioners; the cost of these concessions in 1979-80 is estimated at $1.5 million, an increase of $0.1 million on expenditure in 1978-79. Provision also has been made in 1979-80 for grants to community welfare agencies in financial difficulties or in need of support in providing emergency relief ($0.5 million), and for the costs associated with the Institute of Multi-Cultural Affairs, which is to be established this year ($0.3 million). Aboriginal Advancement Programs nec In 1979-80 expenditure under this heading in respect of programs of special assistance to Aboriginals is estimated at $41.9 million. The assistance includes grants-in-aid in the fields of employment, general welfare, enterprises, management training and town planning, expenditures associated with the National Aboriginal Conference, and the Aboriginal Sacred Sites Protection Authority in the Northern Territory. {:#subdebate-94-98} #### General Administrative and Other Expenditure This expenditure comprises the general running and capital expenses of the Departments of Social Security, Veterans' Affairs (except those relating to repatriation institutions which are recorded under 'Health'), Aboriginal Affairs and the Social Welfare Policy Secretariat. {: type="1" start="5"} 0. HOUSING The Commonwealth funds a range of programs to provide housing and to assist persons to attain home ownership. Some of this assistance takes the form of recycled funds, interest subsidies and tax concessions which are not reflected in Budget outlays. Under the provisions of the *Housing Assistance Act* 1978 the scope of the rental housing grants provided to the States has been extended to a wider group of persons in need than formerly and the States have greater flexibility in the application of the grants. In the light of these changes it has been decided to record total grants to the States under the 1978 Act in the Housing function; grants to the States for pensioner accommodation in 1977-78 and previous years continue to be recorded under 'Social Security and Welfare'. The total Budget provision for housing programs in 1 979-80 is $358.6 million, a decrease of 6.1 per cent compared with 1978-79. Advances to the States and the NT for Housing Advances are made to the States for welfare housing purposes in accordance with the terms of the three-year Commonwealth/State Housing Agreements executed under the authority of the *Housing Assistance Act* 1978. An amount of up to SI 60 million has been provided for these advances in 1979-80. This compares with $316 million advanced to the States in 1978-79. The advances, which are repayable at low rates of interest over a 53 year period, assist the States to provide concessional rental assistance for low income earners and to provide concessional loans to assist low income earners into home ownership. Detailed terms and conditions to apply to the 1979-80 advances (including matching arrangements with States' expenditures) will be announced by the Minister for Housing and Construction. The allocation in 1979-80 between home ownership assistance and rental assistance remains to be determined. By the third year of the Agreements (1980-81), however, at least 40 per cent of the total advances are to be allocated to home ownership programs. Home purchase assistance will be directed to those who are unable to obtain mortgage finance in the private market. The Agreements do not impose specific means tests or prescribe how assistance is to be provided; instead, each State is able to determine for itself the conditions of eligibility for home purchase assistance and to apply its funds to schemes of its own choosing. Assistance is provided on flexible terms so as to limit concessions, as far as practicable, to the period of real need. Purchasers of public housing also have access to loans from the home purchase assistance program if they are unable to obtain finance in the private market. The remainder of the advances will be applied to the construction or acquisition of public housing for rental or sale. The States have the responsibility for the design and conduct of their programs and are free to determine eligibility criteria, provided that assistance is directed to those in need. The States have agreed to move rental ceilings towards market rents and to continue rebates so that those unable to meet the ceiling rent will pay a rent geared to their income and other family circumstances. This system aims to ensure that assistance is geared to need. The Agreements do not impose a limit on the number of dwellings that may be sold, but all sales by the housing authorities are to be at market value or replacement cost, and on the basis of cash transactions. Details of the State by State allocation of the Si 60 million are shown in Budget Paper No. 7, *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80.* The Commonwealth will also provide housing advances, of $8.7 million, repayable over 53 years, to the Northern Territory in 1979-80 for home purchase and rental housing assistance. The same concessional fixed rates of interest as provided to the States will apply. A Housing Agreement, on the same lines as those with the States, is being drawn up for the Territory. The Minister for Housing and Construction will announce the detailed terms and conditions to apply to the advances. Grants for Rental Housing in the States A total of $100 million in grants is to be provided to the States for rental assistance under Section 11 of the *Housing Assistance Act* 1978 which provides for assistance to specified categories of pensioners and for any other class of persons declared by the Minister for Housing and Construction to be in need of rental housing assistance. The increase in grants from $14 million in 1978-79 to $100 million in 1979-80 is designed to direct more assistance to the most needy. These grants complement advances provided for rental housing assistance under the Commonwealth/State Housing Agreements. The 1979-80 grants will be provided for two broad categories - pensioners and other persons in need. {:#subdebate-94-99} #### Pensioners Since 1969-70, the Commonwealth has provided grants to the States to assist with the provision of self-contained accommodation at reasonable rentals for certain categories of single aged and service pensioners who have little or no means of support apart from their pensions. (These grants are recorded in the Social Security and Welfare function for the years to 1977-78.) Since 1978-79 similar grants have been provided under the *Housing Assistance Act* 1978 but with wider eligibility criteria and under conditions which allow the States greater freedom in the way the funds can be applied. Eligible persons include those in receipt of an age or invalid pension, a supporting parent's benefit, a special benefit, a sheltered employment allowance, a training allowance in certain circumstances and some classes of service pension. Married as well as single pensioners are also assisted. Grants totalling S30 million are to be provided in 1979-80, an increase of $16 million. *Other Persons in Need* In 1979-80 the Commonwealth will, for the first time, provide grants for other categories of persons specified as being in need of assistance. The Minister for Housing and Construction has declared that Aboriginals in need of rental housing assistance and persons eligible for or receiving rental housing assistance under the 1978 Commonwealth/State Housing Agreements will be eligible for assistance from these grants; that is, eligible categories will be similar to those in the past receiving rental assistance from advances under the Commonwealth/State Housing Agreements. Grants for Rental Housing in the NT The Commonwealth will provide a grant of $5.3 million to the Northern Territory for rental housing in 1979-80. The Minister for Housing and Construction will determine the allocation of this amount between pensioners and other disadvantaged groups. The arrangements governing these grants will parallel those for similar grants to the States. {:#subdebate-94-100} #### Other Grants to States for Housing The *States Grants (Housing) Act* 1971 provides for housing assistance to the States by way of basic grants of $2.75 million a year, payable for a period of 30 years, in respect of the States' housing operations in each of the years 1971-72 and 1972-73. An amount of $5.5 million is provided in 1979-80 for this purpose. The payments are in lieu of an interest concession on funds used by the States for welfare housing in those years. Further details of these arrangements are contained in *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80.* {:#subdebate-94-101} #### Homes Savings Grants Homes Savings Grants are payable to eligible persons to assist with the purchase or construction of a first home contracted for on or after 1 January 1977, on the basis of $1 for each $3 of savings held in an acceptable form. Savings from 1 January 1976 are eligible. A maximum grant of $2000 is payable in respect of savings over three years while grants of up to $1333 and $667 are payable in respect of savings over two years and one year, respectively. Under new arrangements announced in May 1979, a house value limit applies for homes contracted for after 24 May 1979. Persons buying homes valued at less than $35 000 are eligible for the full grant but the grant reduces progressively as the value of the home increases and cuts out completely when the value of the home exceeds $40 000. An amount of $75.1 million has been provided for Homes Savings Grants in 1979-80, compared with $20.2 million in 1978-79. The current nine months waiting period between approval and payment of grants is expected to remain in 1979-80. {:#subdebate-94-102} #### Housing Loans to Savings Banks - Repayments Under the *Banks (Housing Loans) Act* 1974 advances of SI 50 million were made in 1975 to savings banks and certain other banks to provide a shortterm stimulus to activity and employment in the home building industry. Balances outstanding at 30 June 1979 amounted to $64.4 million. In response to a request from the Government, certain of the banks concerned have indicated that they will be making early repayments of all or part of their loans outstanding in 1979-80. As a consequence, repayments to the Commonwealth are estimated at $35.4 million in 1979-80, compared with $10.7 million in 1978-79. {:#subdebate-94-103} #### Defence Service Homes An amount of $8.8 million will be provided from the Special Appropriation under Section 39c of the *Defence Service Homes Act* to the Defence Service Homes Trust Account in 1979-80. This Section was amended in November 1978 so that funds equivalent to borrowers' excess credit deposits can be made available to the Trust Account for the loans program. In 1978-79, $4.9 million was provided from the Special Appropriation following the amendment; this was offset by a $3 million under-drawing of the appropriation for providing new capital for Defence Service Homes and a repayment of $1.9 million of capital. In 1979-80, an estimated $69.6 million, representing mainly repayments of principal from borrowers during the year, will be retained in the Trust Account for re-lending. A total of $78.4 million will thus be available for Defence Service Homes loans in 1979-80, compared with expenditure of $77.4 million in 1978-79. The existing 14 month waiting period for loans is expected to remain in 1979-80. In 1979-80 $13.4 million is being provided for the Corporation's administrative expenses, including salaries but excluding rent and repairs and maintenance; comparable expenditure in 1978-79 was $13.1 million. Provision is made for a capital repayment of $5.3 million to be made from the Defence Service Homes Trust Account to the Consolidated Revenue Fund in 1979-80 to reflect the proceeds of projected sales of surplus land holdings. Receipts in 1978-79 amounted to S0.5 million. The Corporation has surplus land holdings as a result of the phasing out of the Corporation's estate development and construction activities. Other payments by the Corporation to the Consolidated Revenue Fund in 1979-80 are estimated at $2.3 million in respect of administrative fees and recoveries and $11.7 million in respect of excess payments to the Corporation by borrowers. An interest subsidy estimated at $27.8 million will be appropriated to the Corporation in 1979-80, compared with $27.7 million in 1978-79. The interest subsidy reflects the extent to which interest charged to borrowers of Defence Service Homes loans falls short of the interest payable to the Commonwealth on the Corporation's capital. In November 1978 new arrangements for the determination of the interest payable on the Corporation's capital were introduced to more fully reflect the level of subsidy on the interest charged to borrowers. Interest receipts from the Corporation to the Consolidated Revenue Fund, estimated at $76.2 million in 1979-80, are recorded in the estimates of receipts (see Statement No. 4). {:#subdebate-94-104} #### Other General Housing Expenditure Expenditure under this heading is mainly for caretaking and repairs and maintenance of rental dwellings in the Australian Capital Territory. Housing in the Territories nec Outlays under this heading in 1977-78 were for the construction of new houses and flats and advances to individuals for the construction of dwellings in the Australian Capital Territory and the Northern Territory. Outlays in 1978-79 and 1979-80 relate only to the Australian Capital Territory, responsibility for housing matters in the Northern Territory having been passed to the Northern Territory on 1 July 1978. {:#subdebate-94-105} #### Dwellings Built for Sale or Rental An amount of $2.8 million is included for construction and upgrading of dwellings for sale or rent in the ACT in 1979-80, a reduction of $2.5 million. This provision relates mainly to the upgrading of older dwellings within the existing housing stock; no provision has been made for new additions. This reduced provision reflects the falling off in demand for new government dwellings in the ACT in recent years. {:#subdebate-94-106} #### Other Gross Advances for Housing These advances comprise allocations from the Budget and funds recycled through the ACT Housing Trust Account. A total of $22.0 million is expected to be available in 1979-80 to the ACT Commissioner for Housing for first mortgage lending compared with S16.5 million in 1978-79. Of this total $14.6 million will be provided from Consolidated Revenue ($8.9 million in 1978-79); the balance of $7.4 million is the estimate of the funds to be recirculated through the ACT Housing Trust Account. Housing for Aboriginals nec Special assistance for Aboriginal housing is estimated to increase by $6.1 million in 1979-80, to $45.8 million. The total includes grants to the States and the Northern Territory (SI 2. 8 million), and grants to Aboriginal Housing Associations ($20.5 million) for the construction and purchase of homes for Aboriginal families. Under this item provision also has been made for a payment of $5.5 million to the Aboriginal Housing and Personal Loans Fund of the Aboriginal Loans Commission. Aboriginals who are unable to obtain housing (and personal) loans from other financial institutions are assisted from this Fund. In 1978-79 the Commission approved over 200 housing loans and a similar number is expected to be approved in 1979-80. An amount of $6.8 million is to be paid to Aboriginal Hostels Limited for the provision of hostel accommodation in 1979-80, an increase of $0.8 million over 1978-79. {:#subdebate-94-107} #### Other Recoveries and Repayments Revenue in 1979-80 under this item is derived principally from the rental of government dwellings in the Australian Capital Territory. This revenue is estimated to fall by $0.4 million in 1979-80 in line with a net reduction in the stock of rental housing and an increase in the level of vacancies resulting from higher tenancy turnovers. Although responsibility for rental housing in the Northern Territory passed to the Northern Territory on 1 July 1978, an amount of $0.4 million was received in 1978-79 in respect of rents outstanding at that time. {:#subdebate-94-108} #### Housing Loans Insurance Corporation The Government has announced its intention to sell the assets and business of the Housing Loans Insurance Corporation. The sale will be subject to a satisfactory offer being received and the passage of the necessary legislation. No allowance is made in the 1979-80 estimates for the proceeds which may be received from this sale. {: type="1" start="6"} 0. URBAN AND REGIONAL DEVELOPMENT NEC AND THE ENVIRONMENT Total outlays on the activities covered by this heading are estimated to decline by 11.6 per cent in 1979-80, to$95.3 million. Urban and Regional Development nec This heading covers outlays related to urban and regional development which are not classified to other functions. It includes assistance for the Albury-Wodonga growth centre, general decentralisation, urban rehabilitation, urban flood mitigation and direct expenditure on the development of urban centres in the territories. {:#subdebate-94-109} #### Growth Centres Of the total of $27.1 million shown for growth centres, approximately $22.2 million represents capitalised interest on advances to the States for AlburyWodonga in 1979-80 and earlier years, and on earlier advances for the BathurstOrange, Macarthur and Monarto growth centres. (These - and other capitalised interest provisions - represent, in effect, notional advances to the States which are offset by equivalent notional receipts from the States. The notional advances indicate the extent of the real concession which is afforded to the States by the deferment and capitalisation of interest payments.) An advance of $5.0 million - the same as in 1978-79 - is provided for the Albury-Wodonga growth centre; an additional $0.3 million - recorded as part of the General Administrative Expenditure item - is also provided for the Commonwealth's one-third contribution to the estimated administrative expenses of the Albury-Wodonga Development Corporation in 1979-80. {:#subdebate-94-110} #### Decentralisation Assistance A gross amount of $10.5 million - the same as in 1978-79 - is to be provided in 1979-80 to support general decentralisation initiatives under the Commonwealth's Regional Development Program. This Program was introduced in 1977- 78 to provide assistance of a capital nature to State, local government and community bodies and private firms pursuing manufacturing and tertiary activities in selected non-metropolitan centres. The Minister for National Development approves projects under the Program following consideration of recommendations made by the Decentralisation Advisory Board on applications for assistance. The 1979-80 provision will be partly offset by repayments of earlier loans; these are estimated at $0.6 million and reduce the net outlay to $9.9 million. In addition, interest payments on loans are estimated at about $1 million in 1979-80 (these are recorded with other interest as 'Receipts'). {:#subdebate-94-111} #### Urban Rehabilitation In 1974-75 the Commonwealth acquired, at a cost of $17.5 million, 700 dwellings and about 30 commercial properties on 19 hectares of land at Glebe from the Anglican Church with a view to rehabilitating the Estate and preserving accommodation for low income families. Expenditure in 1978-79 on the rehabilitation of the Commonwealth's Glebe Estate in Sydney amounted to $1.0 million and $0.7 million was spent on maintenance and administration; the 1979-80 estimates include $1.0 million for the completion of rehabilitation work commenced in 1978-79 and $0.7 million for maintenance and administration costs. Income from rents, which have been increased in line with those of the NSW Housing Commission, is estimated at $0.9 million in 1979-80, compared with $0.8 million in 1978-79. The net position in relation to the Glebe Estate is summarised below: An amount of $2 million is provided to meet estimated expenditure in 1979-80 on further acquisition and site development - mainly for residential purposes - of land in the Woolloomooloo Basin of Sydney. Under a 1974-75 agreement, the Commonwealth undertook to provide grants of up to $17 million to New South Wales for the acquisition of 3.2 hectares of land and for planning and site development. Total payments to the State amounted to $10.3 million at the end of 1978-79. The agreement also provides for the State to make payments to the Commonwealth in respect of each unit of public housing produced and for the payment of receipts from any part of the property that is not retained for public housing. Such payments had amounted to $1.2 million by the end of 1978-79 and further receipts of $1.2 million have been allowed for in 1979-80; these receipts have been offset against estimated outlays. In 1974 the Commonwealth advanced S3.5 million to Victoria to acquire, for rehabilitation, the Emerald Hill estate in South Melbourne. Repayments commenced in 1978-79 and are estimated to amount to $0.2 million in 1979-80. {:#subdebate-94-112} #### Urban Flood Mitigation The 1979-80 estimate shown alongside this heading presently includes only the Commonwealth's final contribution of $62 000 for flood mitigation works which were completed in 1978-79 on the Breakfast and Enoggera Creeks in Brisbane. Additional funds for urban flood mitigation could be provided in 1979-80 when the presently unallocated $18.8 million of the $25 million to be provided in 1979-80 under the National Water Resources Program is finally allocated. *Land Commissions /Urban Land Councils* Under a program commenced in 1973-74, Commonwealth assistance was provided for land acquisition, servicing the land acquired (where those costs were not met from normal government subventions) and urban renewal and redevelopment. This program was terminated in 1977-78. The figure of $15.7 million included in the estimates for 1979-80, as well as the $14.6 million shown for 1978-79, represents estimated capitalised interest on the loans provided to the States in 1977-78 and earlier years. {:#subdebate-94-113} #### Other Urban Development and Amenities *Funds* provided under this heading for 1 979-80 include assistance to Tasmania of $0.2 million for development of an industrial estate at Legana in the Launceston area. The bulk of the proposed expenditure ($9.1 million), however, is for the acquisition and development of land in the ACT for residential, commercial and industrial purposes; the 1979-80 provision represents a decrease of $6.2 million on 1978-79. Responsibility for land development and related activities in the Northern Territory was transferred to the NT Government with effect from 1 July 1978. {:#subdebate-94-114} #### Development of Aboriginal Community Amenities Expenditure for this purpose in 1979-80 includes $0.8 million for the provision of services to, and purchase of land by, the Aboriginal Land Fund Commission and $377 000 under States grants programs for the improvement of facilities in Aboriginal communities. The Northern Territory Government assumed responsibility for the provision of essential services to Aboriginal communities in the Territory in 1978-79. Protection of the Environment An amount of $6.2 million is being provided in 1979-80, compared with $3.1 million in 1978-79, for purposes related to the protection of the environment. This increase reflects the full-year costs of environmental protection measures associated with uranium mining operations in the Alligator River region of the Northern Territory. The total includes $1.9 million for the activities of the Supervising Scientist and the Alligator River Region Research Institute and $3.3 million for reimbursement of the Northern Territory Government for environmental regulatory services. Provision is also made in the 1979-80 estimates for radioactive waste management ($225 000), air quality projects ($155 000), marine quality assessment ($100 000) and grants to conservation organisations ($350 000). {:#subdebate-94-115} #### Sewerage and Garbage An amount of $4.9 million is included in 1979-80 estimates for the provision of sewerage, garbage and drainage facilities in the Australian Capital Territory; the reduction compared with 1978-79 reflects the virtual completion of the current, program of major facilities and associated works. (Responsibility for similar services in the Northern Territory passed to the NT Government at the beginning of 1978-79). Repayments of $0.8 million are also included in respect of loans provided to the States in earlier years under a former program of assistance for sewerage works. {:#subdebate-94-116} #### General Administrative Expenditure The major components under this heading are the administrative expenditure of the National Capital Development Commission ($8.2 million) and consultancy fees payable by the Commission for investigation, design and construction purposes ($9.0 million). Also included is the identifiable component of the administrative expenditure of the Department of Science and the Environment which relates to the environment ($1.5 million) and the Commonwealth's contribution to the running costs of the Albury-Wodonga Development Corporation mentioned earlier. The comparison with 1979-80 is affected by the inclusion in the 1978-79 figures of the total administrative expenditure of the Department of Environment, Housing and Community Development, which was abolished in December 1978; provisions for the former functions of that department are now recorded under several functional headings. Part of the $6.8 million reduction also reflects a reduction of $1.5 million in the provision for payments of consultancy fees by the NCDC in 1979-80. {: type="1" start="7"} 0. CULTURE AND RECREATION A total of S3 18.9 million is provided in 1979-80 for support of a wide range of cultural and recreational activities, an increase of 13.5 per cent. {:#subdebate-94-117} #### National Broadcasting and Television Services The radio and television programs of the National Broadcasting and Television Service are presented by the Australian Broadcasting Commission (ABC) and are broadcast through transmitters constructed and operated on behalf of the Commonwealth by the Australian Telecommunications Commission. The net allocation of SI 89.2 million for 1979-80 provides, after allowance for cost increases, for the continuation of the operational activity of the Service at about the existing level. It includes an amount of S4.8 million (an increase of S2.2 million) for further expansion of the National Broadcasting and Television Service network in country areas and for the use of the INTELSAT IV satellite to provide certain remote areas of Australia with their first television service. The Government intends that, in the period to 1981-82, subject to review as necessary, the provision to be made for the ABC would not be less than that for 1979-80, after allowance is made for cost increases. Increases in revenue from the ABC's entrepreneurial activities over estimated revenue for 1979-80, up to a maximum of $7 million in any one year, will also be available to the Commission for expenditure on its other activities. The 1979-80 allocation under this heading also includes $10.9 million for the operations of Radio Australia and the rehabilitation of the Radio Australia station at Darwin. The Government has agreed that additional funds should be provided to the ABC to enable it to accept appointment as Host Broadcaster for the 1982 Commonwealth Games in Brisbane. For that purpose, the 1979-80 Budget provides $1.2 million. {:#subdebate-94-118} #### Planning of Broadcasting and Television Planning of broadcasting and television services generally, which is carried out by the Postal and Telecommunications Department, includes examination of technical matters relating to the adequacy and location of national, commercial and public stations. Outlays by the Department on these functions are estimated at $2.4 million in 1979-80, about the same as in 1978-79. {:#subdebate-94-119} #### Regulation of Broadcasting and Television The provision of $2.8 million for the Australian Broadcasting Tribunal is to enable that body to conduct public inquiries before the granting or renewal of commercial and public station licences, and to carry out other functions under the Broadcasting and Television Act for regulating the radio and television industry. {:#subdebate-94-120} #### Ethnic Broadcasting The allocation for the Special Broadcasting Service (SBS) in 1979-80 ($6.0 million) is more than double expenditure in 1978-79. It provides for further extension of ethnic radio and television services, including $0.5 million for the upgrading of stations 2EA' and 3EA to provide wider coverage in Sydney and Melbourne and for installation of relay facilities in Newcastle and Wollongong; a substantial extension of experimental television programs; and about $0.4 million to provide for direct assistance to certain public broadcasters who transmit ethnic programs, including the use of studio facilities to be established in some major centres. An amount of $0.8 million is provided towards the acquisition by the SBS of television transmitters in Sydney and Melbourne. {:#subdebate-94-121} #### Libraries This provision covers the operations of the National Library of Australia and the Canberra Public Library Service and includes $9.3 million for salaries and related costs and $2.8 million for the purchase of library materials. {:#subdebate-94-122} #### Australian National Gallery and Collection *A* total of $17.6 million is provided for 1979-80, an increase of $4 million. An amount of $7.5 million is provided for the Gallery's operational requirements and development program in 1979-80, compared with $4.9 million in 1978-79. This includes an estimated $4.2 million for acquisition of further items for the National Collection compared with $3.1 million in 1978-79. Expenditure on the new National Gallery building is estimated to increase from $8.6 million to $10.1 million. {:#subdebate-94-123} #### Film Industry Development The Australian Film Commission assists the industry by means of equity capital and loans for the production, promotion and distribution of Australian film, radio and television programs. In addition, grants are provided to encourage creative development in those media. *Assistance to the Arts* The Australia Council administers the Commonwealth's major programs of assistance to the Arts with the assistance of Boards responsible for theatre, community arts, music, literature, Aboriginal arts, crafts and visual arts. The total allocation for the Council in 1979-80 is to increase by $0.8 million to $26.3 million and consists of the following components: Provision also has been made under this item for the establishment of an Art Bank ($0.25 million) and for a new program of support for the management of international art exhibitions ($0.25 million). {:#subdebate-94-124} #### War Memorials Operating costs and capital works for the Australian War Memorial are estimated to cost $2.4 million in 1979-80, compared with $3.0 million in 1978-79. The decrease reflects the completion in 1978-79 of the new repository at Mitchell (ACT). {:#subdebate-94-125} #### Archives An amount of $12.3 million is provided in 1979-80 for the preservation and maintenance of archival resources of national significance or public interest. The main factor accounting for the increase of $4.6 million is the provision in 1979-80 of $6.4 million for the construction of new repositories. {:#subdebate-94-126} #### Youth, Sport and Recreation The 1979-80 allocation of $11.1 million includes $2.7 million for the **Sir Robert** Menzies Memorial Trust; this comprises a donation of $2 million to the Appeal and a further contribution of $0.7 million to match private donations on a $ for $ basis. Other provisions include $2.0 million for the Sports Development Program which provides support for national sporting bodies; $0.7 million special assistance for pre-event training and participation in the 1980 Olympic Games; and $2.5 million as the second instalment of a $10 million grant to the Queensland Government for the 1982 Commonwealth Games. In addition, $0.65 million is included for the 'Life Be in it' campaign, together with $0.5 million to meet estimated final commitments under the Capital Assistance for Leisure Facilities Program. The provision also includes grantsinaid to life saving and youth organisations and funds for a national conference on youth to be held in October 1979. {:#subdebate-94-127} #### Other Cultural Organisations Grants totalling $1.4 million have been provided for other cultural and national organisations, including the National Women's Advisory Council and the National Trusts. Provision also has been made for preparations for the Australian Bicentenary celebrations in 1988, the observance of Australia Day, the Historic Memorials Committee, for the control of Historic Shipwrecks, and for the display and storage of historic relics. {:#subdebate-94-128} #### Wildlife and National Parks Of the $5.8 million allocation for wildlife and national parks, $4.2 million is for the Australian National Parks and Wildlife Service; this includes provision for the development of the Uluru and Kakadu National Parks in the Northern Territory. Provision also is made for the operations of the Great Barrier Reef Marine Park Authority ($0.95 million) and for the operation of nature reserves in the Australian Capital Territory ($0.6 million). {:#subdebate-94-129} #### National Estate Assistance is provided by the Commonwealth to State, Northern Territory and local government bodies and to National Trusts for the protection of the National Estate. An amount of $2.0 million is provided in 1979-80 to finance programs of assistance for the restoration, preservation and improvement of buildings and areas of special significance. In 1979-80 $0.4 million is to be provided to the Tasmanian Government, on a $2 for $1 basis, as part of a new seven-year program to restore and develop the Port Arthur region. {:#subdebate-94-130} #### Australian Heritage Commission The Australian Heritage Commission is responsible for the development of measures for the protection of the National Estate. The budgetary provision is for the running costs of the Commission, which are estimated at $520 000 in 1979-80. *Cultural and Recreational Activities in the Territories nec* This heading covers the construction and maintenance of parks, gardens and reserves, and the provision of assistance for cultural, recreational and community activities, in the Australian Capital Territory (including Jervis Bay). The estimated increase of $2.3 million in 1979-80 largely reflects increased costs for the maintenance of parks, gardens and reserves ($1.4 million). {: type="1" start="8"} 0. ECONOMIC SERVICES This heading brings together the various services and categories of assistance provided by the Commonwealth to industry and to the community generally. It embraces the provision of economic infrastructures, the regulation of private sector economic activity and more direct forms of Government participation in economic activity. {: type="A" start="A"} 0. TRANSPORT AND COMMUNICATION The following table shows the Commonwealth's expenditure for transport and communication purposes in recent years and the estimates for 1979-80, which total$827.8 million. These outlays represent 2.6 per cent of total estimated Budget outlays for 1979-80. {:#subdebate-94-131} #### Communication {:#subdebate-94-132} #### Australian Postal Commission (Australia Post) and Australian Telecommunications Commission (Telecom) Each of these Commissions is required to operate on a commercial basis with the financial objective of generating, by way of charges for services, such amounts as are necessary to meet its operating costs and at least half of its capital expenditure. As in 1978-79, no advances from the Budget will be made to either Commission in 1979-80. Telecom will again be a significant borrower on the domestic capital market, although the bulk of its capital program will be financed from internal sources. Australia Post will draw upon its 1978-79 operating surplus to repay an estimated $14 million of its capital indebtedness to the Commonwealth; during 1978-79 $23.3 million was repaid. {:#subdebate-94-133} #### Overseas Telecommunications Commission This Commission, which is required to operate on a commercial basis, provides telecommunications services between Australia and other countries. In 1978-79 the Commission made a capital repayment of S8 million to the Commonwealth; no further capital repayment is proposed for 1979-80, but the Commission will pay a dividend estimated at $20.0 million to the Commonwealth (recorded in Receipts). {:#subdebate-94-134} #### Radio Frequency Management Administration of the Wireless Telegraphy Act includes regulation of the operations of the many radio-communications licensees (including 'Citizen Band' licensees). The 1979-80 provision of $8.5 million allows for a small increase in this activity compared with 1978-79. {:#subdebate-94-135} #### Administrative and Other Expenditure This heading covers other costs of the Postal and Telecommunications Department and includes provision for on-going investigations into a possible domestic satellite telecommunications system and for the forthcoming inquiry into the role and operations of the Australian Broadcasting Commission. {:#subdebate-94-136} #### Air Transport *Repayments by Qantas Airways Ltd and Australian National Airlines Commission* Past advances to these bodies comprised mainly the proceeds of loans raised by the Commonwealth on behalf of the airlines to assist in the financing of aircraft purchases. Amounts repaid by the airlines to the Commonwealth in respect of past loans - estimated at $67.5 million in 1979-80 - are in turn repaid to the lenders; the forecast reduction in repayments (from the $92.2 million in 1978- 79) reflects both the timing of repayments and a decision by Qantas to make advance repayments of $74 million in 1978-79. No provision has been made for further loans to the airlines in 1979-80. {:#subdebate-94-137} #### Civil Aviation Services - Administrative and Operational Expenditure The Department of Transport provides many services to the air transport industry, including the provision and operation of over 80 aerodromes and a network of air navigation facilities. These activities account for the major portion of administrative and operational expenditures and for the outlays on buildings, works and equipment. Administrative and operational expenditure on air transport activities in 1979- 80 is estimated at $191.4 million, an increase of $11.0 million. This increase is to provide for the higher level of air traffic forecast in 1979-80 and to preserve the existing standards of services and safety. **Major new** projects to be commenced in 1979 80, subject to endorsement by the Parliamentary Standing Committee on Public Works, are redevelopment of Brisbane Airport and construction of a new terminal complex at Coolangatta Airport. The first stage of the Brisbane Airport redevelopment - including reclamation, drainage, earthworks, runway and taxiways - is estimated to cost $92 million of which $3 million is expected to be spent in 1979-80. The redevelopment at Coolangatta is estimated to cost $4.5 million and provision is made for expenditure of $750 000 in 1979-80. Outlays on other works, and for acquisitions of land for airport purposes and houses for staff in remote locations, are estimated to increase by $2.9 million. A total of $11.4 million is to be provided for purchases of navigational aids and other technical equipment, including a further payment of $2.0 million under a program to upgrade the fire fighting capabilities at major airports. The total cost of this program is estimated at $5 million over 4 years. {:#subdebate-94-138} #### Air Service Subsidies Provision is made for subsidy payments totalling $0.5 million in 1979-80 to operators of essential air services in remote areas of Western Australia, Queensland and the Northern Territory. This includes $284 000 provided for continuing assistance to Connair Pty Ltd; the subsidy to the company is to be maintained on a reducing basis until September 1980. {:#subdebate-94-139} #### Other Expenditure Included here is $4.2 million (25 per cent more than in 1978-79) to meet the Commonwealth's share of approved maintenance and development projects proposed by local government authorities under the Aerodrome Local Ownership Plan; $0.5 million of this allocation is for approved 'pre-transfer' development works at Commonwealth-owned aerodromes which are to be taken over by local government authorities. The estimates also include $420 000 to enable continuation of the Department of Transport's InterScan program and other aviation research activities in 1979-80. {:#subdebate-94-140} #### Civil Aviation Services - Recoveries *Air Navigation Charges.* As announced in the Budget Speech, the Government intends to move to full recovery of costs for the domestic trunk airline sector over the next 3 years and to this end will be seeking the concurrence of the parties to the Airlines Agreement for an annual increase of 25 per cent in air navigation charges over that period. This increase, which is expected to be effective from 1 December 1979 and would also apply to rural airlines, is estimated to yield additional recoveries of $3.7 million in 1979-80. The remainder of the forecast increase of $11.6 million in air navigation charges reflects expected growth in air traffic, the full year effect of the 1978-79 increases and the Government's intention to increase air navigation charges for general aviation by 20 per cent by December 1979. Air navigation charges are not being increased for the international airlines; all costs attributable to that sector are being fully recovered already. *Other Recoveries.* Annual revenue from airport rentals is estimated to increase by $14.2 million in 1979-80, to $21.5 million. The 1979-80 estimate includes $2 million in rental arrears from 1978-79 and $7.5 million which relates to receipts from earlier year's operations. The latter amount is currently held in trust pending a decision on a request by the International Air Transport Association for the repayment of certain rental payments in the light of a decision of the NSW Supreme Court. Revenue from business concessions at airports in 1979-80 is estimated at $13.5 million, a small increase over 1978-79. An additional $1.1 million is expected to be raised in 1979-80 from charges to be levied on a wide range of regulatory services provided by the Department of Transport. {:#subdebate-94-141} #### Road Transport *Road Grants to States and NT* An amount of $546 million is to be made available to the States under the *States Grants (Roads) Act* 1977 in 1979-80. This provision represents an increase of 7.5 per cent over 1978-79 and accords with the Government's undertaking to at least maintain these grants at the same level in real terms over the three years 1977-78 to 1979-80. In line with the new financial arrangements for the Northern Territory, a specific purpose grant of $19 million will be made for road construction and maintenance in the Territory in 1979-80. *Road and Related Works in the Territories* The 1979-80 Budget allocation covers expenditures for the construction, improvement and maintenance of roads and bridges in the ACT, including parking facilities and public transport inter-change systems. Expenditures on construction of new roads and improvements to existing roads are estimated to decline by $10.3 million in 1979-80, mainly reflecting progress towards completing several major arterial roads; expenditure on maintenance is estimated to increase by $1.4 million. Similar expenditures for the Northern Territory are included under this heading for years prior to 1978-79. Under transitional arrangements operating in 1978-79 Northern Territory roads funds were provided from the global allocation to the Northern Territory Government. In 1979-80 and subsequent years the Territory will receive a specific purpose payment for roads in the same way that similar grants are provided to the States. {:#subdebate-94-142} #### Road and Related Works - Other The Commonwealth has agreed to fund, by way of special grants, the full cost of providing a second bridge across the Derwent River at Hobart. The total cost of the bridge and its immediate approaches is estimated to be about $32 million, of which $1 million is likely to be required in 1979-80. The investigation and design work completed in 1978-79 by the Joint Committee on the Second Hobart Bridge, at a total cost of $1.2 million, was also funded by the Commonwealth. Expenditures shown under this heading are net of annual repayments of $0.6 million from Queensland in respect of advances provided some years ago for the construction of beef cattle roads. *Public Transport Equipment in the Territories* The figures for 1978-79 and 1979-80 relate to the purchase of plant and equipment for transport operations in the Australian Capital Territory. (Outlays in 1977-78 included $1.8 million for equipment purchases in the Northern Territory, responsibility for which was transferred to the Northern Territory Government on 1 July 1978). The reduction in estimated outlays for 1979-80 mainly reflects the relatively high level of expenditure on buses in 1978-79 which, in turn, reflected delays in delivery. {:#subdebate-94-143} #### Road Research and Investigations The figure shown for 1979-80 represents the Commonwealth's direct contribution to the Australian Road Research Board ($259 000, the same as in 1978-79). Prior to 1978-79 expenditures relating to traffic administration in the Northern Territory were also included under this heading. {:#subdebate-94-144} #### Rail Transport *Australian National Railways (ANR)* The 1979-80 allocation to ANR consists of $55.3 million to meet operating losses and $38.2 million for capital works. The Government is looking to ANR to continue in 1979-80 efforts begun in 1978-79 to eliminate operating losses; the 1979-80 provision for losses is $8.5 million less than that made in 1978-79. The major element in the capital works program is the construction of a standard gauge railway between Tarcoola and Alice Springs, for which $36.2 million is provided in 1979-80; this provision, which is up 10 per cent, is in line with an accelerated construction program aimed at completing the line at about the end of 1980, some twelve months ahead of the previous schedule. *Rail Projects in the States* Under the *National Railway Network (Financial Assistance) Act* 1979, those States which operate their own railway systems are to be provided with loans totalling $70.0 million over the period to 1982-83 for projects designed to upgrade the national mainline railway network. An amount of $11.0 million has been allocated for the program in 1979-80. This assistance is subject to the finalisation of agreements with the States, which will set down the terms and conditions to apply. Repayments of past advances from the Commonwealth for State rail projects (mainly standardisation) are estimated to amount to $5.5 million in 1979-80. {:#subdebate-94-145} #### Urban Public Transport Under the *States Grants (Urban Public Transport) Act* 1978 the Commonwealth is to provide grants totalling $300 million to the States for urban public transport projects over the five years 1978-79 to 1982-83. The Act initially provided for payments to the States at the rate of $60 million a year, of which $40 million was to be allocated in fixed guaranteed amounts, with the remaining $20 million to be allocated on the basis of needs and priorities assessed in the light of proposals submitted by the States. As in 1978-79, the Government has decided to limit payments in 1979-80 to the guaranteed amount. The 1979-80 provision of S40.1 million includes $132 000 in respect of commitments entered into in 1978-79 but not paid in that year, and brings total allocations for 1978-79 and 1979-80 to $80 million. In addition to $40.1 million to be provided under the current Act, $2.6 million is included to meet outstanding commitments under the previous Urban Public Transport Agreement; in 1978-79 $2 million was paid in respect of similar commitments. {:#subdebate-94-146} #### Transport Planning and Research The Commonwealth is providing $6.9 million in 1979-80 (including $16 400 in respect of commitments entered into in 1978-79 but not paid in that year) under a $ for $ cost sharing arrangement with the States, for an approved program of land transport planning and research projects. The total program to be supported under these arrangements is estimated at $13.8 million (an increase of 7.5 per cent) and should enable the program to be maintained in 1979-80 at the same level in real terms as in 1978-79. In addition, $2.7 million is provided in 1979-80 to finance the Bureau of Transport Economics (BTE), which conducts research into the economics and operations of all modes of transport. {:#subdebate-94-147} #### Shipping and Harbours {:#subdebate-94-148} #### Australian Shipping Commission The repayments shown in earlier years relate to past borrowings by the Australian Shipping Commission from the Budget; no repayments are due in 1979-80. {:#subdebate-94-149} #### Shipping Subsidies - Tasmania An amount of $27.2 million is provided in 1979-80 for the Tasmanian freight equalisation scheme. This scheme aims to bring the door-to-door freight costs of eligible cargoes shipped between Tasmania and the mainland into approximate equality with the door-to-door costs of moving similar goods by road or rail over comparable interstate routes on the mainland. Also included in the 1979-80 estimates is a $2.0 million payment to the Australian Shipping Commission to subsidise the operations of the 'Empress of Australia' passenger service between Tasmania and the mainland in 1979-80; a similar payment was made in 1978-79. {:#subdebate-94-150} #### Shipping and Harbours - Other Included here is an allocation of $4.2 million in 1979-80 for capital expenditure on equipment and facilities, mainly in respect of marine navigational aids. This represents an increase of 73 per cent on expenditure in 1978-79 and marks the first year of a five-year plan approved in principle to modernise and extend Australia's marine navigational aids network to improve the safety and efficiency of commercial shipping. Also included is a total of $581 000 for special oil pollution recovery and containment equipment; and for costs associated with the relocation of the Coastal Surveillance Centre. {:#subdebate-94-151} #### Pipelines The interest-bearing advance of $26.2 million to be made to the Pipeline Authority in 1979-80 is to meet the shortfall between the Authority's revenue, which is derived primarily from the haulage of gas from Moomba to Sydney, and its expenditures, including interest and capital repayments to the Commonwealth. The Authority's expenditure estimates for 1979-80 include $27.1 million for interest payments to the Commonwealth and $14.8 million for capital repayments to the Commonwealth. {:#subdebate-94-152} #### General Administrative and Other Expenditure The 1979-80 provision of $43.1 million for the running expenses of the Department of Transport (other than expenses related to provision of air transport services and the functions of the Bureau of Transport Economics) includes $30.8 million for salaries and payments in the nature of salaries. A major component of this item is recurrent expenditure on the provision of marine navigational aids, which is fully recoverable *(see below).* Also included in the 1979-80 estimate is an amount of $1.5 million for the charter of Nomad aircraft to evaluate their suitability for coastal surveillance purposes. {:#subdebate-94-153} #### Other Recoveries The bulk of recoveries under this heading comes from light dues, which are charged on commercial shipping for the use of marine navigational aids provided by the Commonwealth. The present charge of 41 cents per net registered ton per quarter is estimated to be sufficient in 1979-80 to fully recover the costs incurred by the Commonwealth in providing and maintaining marine navigational aids. Fees and charges levied under the Navigation Act are being increased by an average of about 400 per cent from 1 October 1979 and are estimated to yield $1.7 million in 1979-80, compared with $451 000 in 1978-79. These increases are aimed at full recovery of costs related to the survey and inspection of ships and to other services for which charges are currently levied under the Act. The Office of Road Safety, which provides technical and administrative support to the Australian Design Rule Certification system for new motor vehicles, will increase the sale price of vehicle compliance plate forms from 1 October 1979. The new charges are estimated to increase revenue from $537 000 in 1978-79 to $860 000 in 1979-80; these increases are directed towards achieving full recovery of the costs of operating this system. {: type="A" start="B"} 0. WATER SUPPLY AND ELECTRICITY Estimated outlays on urban water supply and electricity projects in 1979-80 are shown in the following table. It should be noted that, at this time, no provision is made under this heading for any funds that might be provided for urban water supply projects from the SI 8. 8 million which remains to be allocated to specific projects in 1979-80 under the National Water Resources Program *(see* next section - Industry Assistance and Development: Irrigation and Other Pastoral Water Projects). {:#subdebate-94-154} #### Urban Water Supply Included under this heading is an amount of $1.7 million for water storage and reticulation works in the ACT. In large measure the reduction in this category of expenditure compared with 1978-79 (and 1977-78) reflects progress towards the completion of the Googong Dam and appurtenant works, which will increase water storage capacity in the Canberra/Queanbeyan area. The 1979-80 estimate also includes a grant of $250 000 to Queensland for on-passing to the Mount Isa City Council as the final portion of the Commonwealth's assistance towards the Council's share of the debt burden associated with the now-completed Julius Dam. Similar grants of $325 000 and $500 000 were made in 1977-78 and 1978-79, respectively. As noted above, possible levels of assistance for other urban water supply projects will be determined when the presently unallocated component ($18.8 million) of the $25 million to be provided in 1979-80 under the National Water Resources Program is allocated to specific projects. In 1978-79 $4.5 million was provided under this Program to assist with the construction of water treatment plants in the Adelaide metropolitan area. {:#subdebate-94-155} #### Snowy Mountains Scheme Only minor capital expenditures have been incurred on this Scheme in recent years. Expenditure by the Snowy Mountains Hydro-Electric Authority on capital account is estimated at $0.5 million in 1979-80 and this is expected to result in the completion of all approved stages of the permanent works of the Scheme. This proposed expenditure, however, is expected to be offset fully by receipts on capital account and no net appropriation is sought in 1979-80. In 1978-79 net expenditure on capital account amounted to $0.1 million. The Authority commenced a program of borrowings on its own account in 1978-79 to fund assets for the operations and maintenance of the Scheme. The 1978-79 borrowing program was $222 000; a program of $960 000 is expected in 1979-80. {:#subdebate-94-156} #### Gladstone Power Station Over the period 1972-73 to 1977-78, the Commonwealth provided loan finance to Queensland totalling $138.7 million for the construction of a thermal power station at Gladstone. *Electricity Supply in the Territories* The 1979-80 estimate of $30 million is a subsidy payment for the Northern Territory Electricity Commission. Under the Memorandum of Understanding between the Commonwealth and the Northern Territory, the Commonwealth has agreed to provide a subsidy for the operations of the Commission up to 1981-82 based on the difference between estimated operating costs and revenues of the Commission at average North Queensland tariffs. That fixed figure is subject to an addition of half the amount by which the operating loss in a particular year exceeds the estimated loss, or a reduction of half the amount by which the operating loss in a particular year falls short of the estimated loss. In 1978-79 the subsidy in respect of the Commission's operations was provided from the global allocation to the Territory. Since 1 July 1978 the Australian Capital Territory Electricity Authority has financed its total capital expenditure requirements from its own resources and from borrowings on its own account. {:#subdebate-94-157} #### Repayments From 1979-80, for a period of thirty years, Queensland is liable to make repayments to the Commonwealth totalling $4.1 million annually (excluding capitalised interest) in respect of assistance received for the Gladstone Power Station. Other estimated repayments in 1979-80 include $5.5 million from the Snowy Mountains Hydro-Electric Authority and $3.0 million in respect of earlier loans for hydro-electric schemes in Tasmania. {: type="A" start="C"} 0. INDUSTRY ASSISTANCE AND DEVELOPMENT The Commonwealth assists industry through a variety of measures, including direct financial assistance, taxation concessions, guaranteed domestic price arrangements, financial guarantees and the customs tariff. Direct industry assistance takes the form of bounties and subsidies, reconstruction, adjustment and emergency relief schemes, contributions to research and promotion programs, disease eradication schemes, price support and other payments to or for the benefit of industry. It includes some outlays by Government departments and instrumentalities (e.g. the Departments of Industry and Commerce, Primary Industry, Trade and Resources and the Australian Tourist Commission) which provide many services either free of charge or for charges which do not recover fully the costs incurred. Apart from these direct outlays from the Budget, substantial additional assistance has been provided through the Budget by way of special taxation concessions which, as they result in a reduction of Government revenues, are as much a call on the Budget as are direct outlays. The amount of revenue forgone in 1978-79 through the main taxation concessions is estimated to have been in excess of $770 million. Further information relating to these taxation concessions is provided following the commentary on direct assistance to various industry categories. Outlays under some other functional headings also assist industry. Examples include the provision of airports and airways facilities for the aviation industry, assistance for the development of the film and television industry, some specific purpose payments to the States, expenditure to maintain or improve the defence capacity of industry, and some expenditure by the CSIRO. Net direct assistance from the Budget (ie after deducting amounts collected by way of industry levies and charges such as wool tax and the livestock slaughter levy) is estimated at $641.9 million in 1979-80 compared with $508.5 million in 1978-79. Outlays on direct assistance to major industry categories are summarised in the following table: Detailed information on each of these industry categories is set out below. {:#subdebate-94-158} #### Softwood Forestry Development The Commonwealth has provided loans to the States for the planting and/or maintenance of softwood forests since 1966. Under the *Softwood Forestry Agreements Act* 1978 the Commonwealth is to extend assistance to the States during the five-year period commencing 1977-78 to cover the cost of maintaining softwood forestry plantations established under the *Softwood Forestry Agreements Acts* 1967, 1972 and 1976. That assistance is provided by way of loans repayable over 20 years with repayments commencing 15 years after the date of each advance. Depending on State preferences, interest is either capitalised over the deferment period or paid as it falls due. Because of delays in finalising agreements with the States, no payments were made under the 1978 Act in 1977-78. Net payments during 1978-79 totalled $7.5 million of which $3.5 million was in respect of 1977-78 entitlements. Net payments during 1979-80 are estimated at $5.7 million. {:#subdebate-94-159} #### Other Forestry Following the report of the inquiry by **Sir Bede** Callaghan into the structure of industry and the employment situation in Tasmania, the Commonwealth Government agreed to provide assistance to Tasmania towards the cost of certain silviculture projects to be undertaken during the five-year period commencing 1978-79. There were no payments in 1978-79 but assistance, by way of loans on a $ for $ matching basis, is intended to commence during 1979-80 with a payment of $272 000. The loans are to be repayable over 40 years commencing 20 years after each advance is made; interest will be capitalised during the 20 years in which repayments are deferred. The Government intends also to provide further loan funds of $100 000 per annum for the next 4 years - on a $ for $ basis - for the establishment of eucalypt plantations on marginal farm land and for the purchase of such farm land. {:#subdebate-94-160} #### Fisheries Research, Promotion and Development The Australian Fishing Zone is expected to be proclaimed during 1979-80, with a consequent increase in the administration and patrolling activities carried out by the States and the Northern Territory on behalf of the Commonwealth. An amount of $1.5 million is provided for reimbursing the costs of such activities. Also included are grants to match industry contributions for fisheries research ($850 000); fisheries development ($500 000, including $100 000 for Torres Strait fisheries); and a contribution, by way of a grant, for the establishment of educational facilities within a fish centre to be established by the Tasmanian Government in Hobart ($234 000). {:#subdebate-94-161} #### Fisheries Charges This item includes Commonwealth fisheries licence fees, and additional payments by foreign fishermen for access to the Australian Fishing Zone. The 1979-80 estimate of $3.0 million includes an allowance for access fees in respect of agreements which are currently being negotiated with foreign Governments and foreign fishermen. {:#subdebate-94-162} #### Wool Industry {:#subdebate-94-163} #### Wool Marketing Assistance The Government has authorised the Australian Wool Corporation to operate a minimum reserve price of 318 cents per kilo clean on a whole clip average basis for the 1979-80 wool selling season, compared with a minimum reserve price of 298 cents per kilo for the 1978-79 season. The Corporation will continue to regulate the flow of wool onto the auction market to improve the balance between quantities of wool supplied and demanded and will purchase above the floor price where necessary to reduce random movements in prices. The Wool Tax (8 per cent of the gross returns from wool sold) is estimated to yield $100 million in 1979-80. This tax includes a special levy of 5 per cent on the gross returns from wool sold to offset any losses which may arise from the operation of the reserve price scheme; it is estimated that the special levy will result in an amount of $62.5 million being collected and paid to the Corporation's Market Support Fund in 1979-80. {:#subdebate-94-164} #### Research, Promotion and Other Expenditures The Budget provides for expenditure of $59.8 million on wool promotion and research in 1979-80. After allowing for receipts of $37.7 million from the industry by way of Wool Tax (3 per cent of gross returns from wool sold) and other income, the net Budget outlay in 1979-80 on wool promotion and research is estimated at $22.1 million. {:#subdebate-94-165} #### Wheat Industry {:#subdebate-94-166} #### Wheat Industry Stabilization The provisions of the sixth Wheat Industry Stabilization Scheme will lapse with the completion of the marketing of the 1978-79 wheat pool, probably towards the end of 1979-80. Export market conditions have been consistently favourable in recent years and grower contributions to the Stabilization Fund established under the Scheme reached the prescribed maximum of $80 million in July 1976. Since then grower contributions, together with interest earned on Fund balances, have been returned to growers on a first-in-first-out basis. A further contribution of $30 million is expected this year for the 1978-79 pool and an equivalent amount, plus an allowance for interest, will be refunded to growers. The Minister for Primary Industry announced on 10 June 1979 the details of the stabilization legislation proposed to apply for the 1979-80 to 1983-84 wheat pools. It is intended that under this legislation the Commonwealth will guarantee a minimum price for each pool, with payment of any necessary subsidy being made when the pool is wound up. {:#subdebate-94-167} #### Wheat Board - Interest Subsidy The Rural Credits Department of the Reserve Bank has normally provided (under Commonwealth guarantee) seasonal finance to enable the Wheat Board to make first advance payments to growers on delivery of their wheat. Following the outstanding yields in the 1978-79 season, that arrangement was seen as presenting difficulties for the Government's monetary management. The Government therefore requested the Wheat Board to raise part of its 1978-79 seasonal requirement by issuing and discounting commercial bills. These commercial borrowings, totalling $455 million, involve additional costs to the Board of about $6.5 million which will be reimbursed to the Board from the Budget in 1979-80. {:#subdebate-94-168} #### Sugar Industry {:#subdebate-94-169} #### Loans to Queensland Under the price stabilization arrangements of the International Sugar Agreement (ISA) members are required to accumulate special reserve stocks. Although the ISA has not yet been fully implemented, the International Monetary Fund has agreed to make funds available, from its Buffer Stock Financing Fund, to sugar exporting countries facing balance of payments difficulties, to finance the accumulation of such reserve stocks. It is expected that, upon conclusion of an appropriate agreement with the Queensland Government, the Commonwealth will in 1979-80 make a drawing under this facility of $27.5 million on behalf of the sugar industry and that this money will be on-lent to the industry through the Queensland Government. If the United States confirms its membership, the ISA would become fully operative. In those circumstances, a separate ISA Stock Financing Fund, from which Australia may draw, would come into operation. No allowance, however, has been included in the Budget for a drawing from this Fund in 1979-80. {:#subdebate-94-170} #### Repayments The repayments shown relate to the market support loans extended to Queensland in 1967. {:#subdebate-94-171} #### Dairy Industry {:#subdebate-94-172} #### Dairy Industry Stabilization Under the marketing arrangements for dairy products introduced by the Government on 1 July 1977, an equalisation levy (equal to the difference between the domestic price and the assessed average export price) is imposed on the production of certain prescribed dairy products, and the proceeds redistributed among manufacturers with a view to protecting the domestic price structure and ensuring that manufacturers receive an equalised return from total domestic and export sales. Levy collections and payments to manufacturers are estimated at $85.3 million in 1979-80. {:#subdebate-94-173} #### Price Support for Dairy Products In addition to the marketing arrangements referred to in the previous paragraph, the Government has continued to underwrite equalisation values for certain dairy products (Le. guarantee floor prices for them). A provision of $19.5 million is included in 1979-80 to cover the Commonwealth liability for the 1978-79 season. Underwriting for the 1978-79 season was designed to return $1.65 per kilogram butterfat at the farm gate and was restricted to specified quantities of prescribed products. Underwriting in the 1979-80 season (at SI. 75 per kilogram butterfat) will apply to total production of the relevant products. {:#subdebate-94-174} #### Repayments In addition to the levy referred to under Dairy Industry Stabilization, repayments by the States in respect of dairy industry adjustment programs are recorded here. {:#subdebate-94-175} #### Fruit Industry {:#subdebate-94-176} #### Stabilization, Research and Promotion Legislation enacted in 1978 for apple and pear industry stabilization approved a maximum Commonwealth export price support commitment of $3.3 million for apples and $0.8 million for pears for each of the 1979 and 1980 export seasons. In addition, the Commonwealth agreed to offer supplementary assistance for the 1979 and 1980 export seasons, on a S for $ matching basis with the States, of up to $0.75 million a season for apples and up to $0.2 million a season for pears. As the 1979 season export returns for apples have been unfavourable, the Budget provides for the maximum payments under the two assistance schemes for apples of $3.3 million and $0.75 million. For pears, export returns have been somewhat better and it is estimated that payments in 1979-80 for price support will amount to about $0.2 million, with a further $0.2 million being paid under the supplementary assistance arrangements. In addition, an amount of $2.8 million is provided, largely financed from industry levies, for research and promotion of the fruit industry. {:#subdebate-94-177} #### Charges and Repayments The receipts of $3.7 million estimated for 1979-80 are mainly industry contributions under the dried fruits stabilization scheme and industry levies raised to finance the operations of several fruit industry marketing authorities. Export prices for dried vine fruits have been very buoyant in recent years, following downturns in Northern Hemisphere production. In consequence, the 1979-80 Budget includes allowance for the growers' maximum pay-in of $1.2 million under the Dried Vine Fruits Stabilization Scheme. In addition, the high export returns are expected to render inoperative the provisions of the Dried Vine Fruits Equalisation Scheme in 1979-80. {:#subdebate-94-178} #### Poultry Industry Outlays on stabilization and research for the poultry industry are financed mostly from industry levies which flow back to the industry through State research bodies and egg marketing authorities in accordance with the terms of the egg industry stabilization scheme. Receipts and expenditure for stabilization purposes in 1979-80 are estimated to increase substantially as a result of an increase in the hen levy from $1 to SI. 82 per hen per annum, effective 1 July 1979. {:#subdebate-94-179} #### Cattle, Sheep and Pig Meat Industry *Eradication of Cattle Diseases and Compensation (net)* Net payments for disease eradication and compensation are estimated at $2.6 million in 1979-80. A total of $25.6 million is estimated to be payable to the States and the Northern Territory in 1979-80 for the bovine brucellosis and tuberculosis eradication campaign. That amount includes $22 million for eradication operations and $3.6 million in grants towards slaughter compensation payments. To help offset the Commonwealth's expenditure for disease eradication operations the slaughter levy applied for this purpose was raised from $1 per head to $3 per head from 1 July 1979. This levy is expected to raise $23.1 million in 1979-80. The reduction of $10.9 million in net payments compared with 1978-79 reflects the increase in the slaughter levy from 1 July 1979. *Inspection Services (net)* Gross outlays in 1979-80 for meat export inspection and animal health services undertaken by the Bureau of Animal Health are estimated at $37.9 million, an increase of $2.3 million over 1978-79. Estimated revenue of $3.5 million from charges to exporters for meat export inspection services outside prescribed hours, and an amount of SI 6.2 million pursuant to the Government's decision announced in May 1979 to recover approximately 50 per cent of all export inspection costs for meat, are netted off gross C03tS in arriving at the net outlays estimate. {:#subdebate-94-180} #### Beef Industry Assistance Funding under the scheme introduced in 1977-78 to provide incentive payments of $10 per head in respect of certain recognised animal health and husbandry procedures carried out on beef cattle between 23 September 1977 and 22 September 1978 is now virtually completed. This scheme, which was designed to alleviate a cash flow problem for beef producers and to maintain essential animal health practices, was restricted to producers who owned 50 or more cattle at 30 June 1977. Assistance to 30 June 1979 totalled $117.5 million; it is expected that another $0.4 million will be paid in 1979-80 in final payments under the scheme. In pursuance of the Commonwealth's commitment to provide up to $6 million towards the cost of implementing a beef cattle carcass classification system, assistance of $942 000 was provided to 30 June 1979. It is estimated that $1.2 million will be spent for this purpose in 1979-80. Outlays not Allocated to Specific Agricultural and Pastoral Industries {:#subdebate-94-181} #### Primary Industry Bank of Australia The Primary Industry Bank of Australia Limited was established in 1978 to increase the availability of longer-term loans to primary producers (including fishermen). The Bank operates as a re-financing institution, borrowing funds for on-lending to other financial institutions which in turn lend to individual primary producers. In 1978-79 the Commonwealth subscribed $625 000 in equity capital to the Bank, and S30 million was deposited with the Bank from the Income Equalisation Deposits (IED) Trust Account at an interest rate of 5 per cent per annum (the latter assistance was recorded in financing transactions rather than outlays). Arrangements for 1979-80 were not finalised at the time of preparation of this document. {:#subdebate-94-182} #### Rural Reconstruction/ Adjustment The Rural Adjustment Scheme, established under the *States Grants (Rural Adjustment) Act* 1976, provides assistance to the States for purposes of farm debt reconstruction, farm build-up, farm improvement and rehabilitation, carryon finance and household support. Assistance for debt reconstruction, farm build-up, farm improvement and rehabilitation is made available by the Commonwealth on an overall 85 per cent loan/ 15 per cent grant basis, with the Commonwealth contributing a further amount to assist in defraying administrative expenses. For the household support component, the Commonwealth finances all assistance and contributes towards administrative expenses; the States repay to the Commonwealth any principal and interest recouped by them. For carry-on finance, the States share equally with the Commonwealth both the financing of loans (and administrative costs) and all principal and interest payments received from producers. For 1979-80, carry-on finance will be available only to wine grape growers. Outlays under the Scheme are estimated at $19.2 million (which includes $0.5 million for the Northern Territory) in 1979-80 compared with $47.0 million in 1978-79. {:#subdebate-94-183} #### Fertilizer Bounties Payments under the *Phosphate Fertilizers Bounty Act* are estimated at $40 million in 1979-80. The rate of bounty remains unchanged at $12 a tonne. The Budget provides for the subsidy under the *Nitrogenous Fertilizers Subsidy Act* to be continued at a reduced rate of $20 per tonne from 1 January 1980. Subsidy payments in 1979-80 are estimated at S7.5 million. *Inspection Services nec* In addition to export meat inspection services, the Commonwealth provides for export inspections in respect of grains, fruits and other exports requiring quality certification. The net cost of these services is estimated at $5.3 million in 1979-80 after allowing for estimated revenue of $0.8 million flowing from the Government's decision to recover 50 per cent of all export inspection costs for grains and wool with effect from 1 July 1979. {:#subdebate-94-184} #### Agricultural Extension and Research The Budget provides $4.78 million in grants to the States (and to the Northern Territory) for the development of their agricultural advisory services. The Commonwealth proposes to spend a further $220 000 directly on projects which are of common interest to several States. Also included is $143 000 for lucerne aphid control; $200 000 for Australian Agricultural Council-sponsored projects; and $243 000 for certain agricultural research activities. {:#subdebate-94-185} #### Irrigation and Other Pastoral Water Projects Expenditure under this heading comprises Commonwealth assistance for rural water conservation, irrigation and flood mitigation. In November 1977 the Commonwealth announced that it would contribute $200 million, as grants and/or loans, for water-related purposes in the States over the five years to 1982-83 under the National Water Resources Program (NWRP). A total of $20.6 million was spent in 1978-79, including $19.5 million under the NWRP. A further amount of $25 million has been allocated for 1979-80. Most, but not all, of this expenditure is likely to be for irrigation and other pastoral water projects. As noted previously (see Water Supply and Electricity - Urban Water Supply) $18.8 million of the 1979-80 total has not yet been allocated to specific projects. Further details on the NWRP are contained in Budget Paper No. 7, *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80.* {:#subdebate-94-186} #### Irrigation, Investigation and Other Water Projects Final allocations for irrigation projects in 1979-80 have still to be settled. With the completion of Dartmouth Dam this year, however, the Commonwealth's contribution to the cost of works authorised under the River Murray Waters Agreement will be much less than in previous years. A total of $1.4 million is included in the 1979-80 Budget for these works, compared with expenditure of $2.7 million in 1978-79 and $7.8 million in 1977-78. An amount of $67 000 will be provided for minor works associated with the Ord Irrigation Scheme. An amount of $415 000 will be provided for water research in 1979-80 but other allocations for water resources assessment in the States have still to be determined. Provision also is made for a payment of a specific purpose grant of $1.9 million to the Northern Territory in 1979-80 for water resources assessment. {:#subdebate-94-187} #### Salinity Mitigation and Drainage An amount of $1.8 million was provided in 1978-79 for a co-ordinated program designed to tackle salinity and drainage problems in the Murray Valley. Existing commitments in respect of this program in 1979-80 amount to $2.6 million but the total provision to be made for these works has still to be determined. {:#subdebate-94-188} #### Flood Mitigation An amount of $1.0 million will be provided for flood mitigation works on the New South Wales coastal rivers in 1979-80, the same as in 1978-79. The possibility of additional assistance being provided for flood mitigation will be determined in the context of the distribution of the unallocated balance of the NWRP provision. {:#subdebate-94-189} #### Recoveries and Repayments Repayments are estimated at $2.7 million in 1979-80 and include $2 million from New South Wales in respect of earlier advances for the construction of the Blowering Reservoir. {:#subdebate-94-190} #### Land Development Projects {:#subdebate-94-191} #### War Service Land Settlement Outlays on this scheme in 1979-80 are estimated at $2.0 million, the same as in 1978-79. The total includes $0.9 million for agent States to make credit facilities available to eligible settlers and $1.0 million towards the operation and maintenance of the Loxton irrigation project in South Australia. {:#subdebate-94-192} #### Other An amount of $400 000 is included for rural re-establishment loans for eligible veterans. The Commonwealth/State Collaborative Soil Conservation Study for which funds were provided in earlier years under this item was completed in 1978-79. The Report is being studied by the Government with a view to determining the nature and extent of future Commonwealth involvement in soil conservation activities. {:#subdebate-94-193} #### Repayments The estimate of $3.1 million for repayments includes $2.0 million in respect of War Service Land Settlement. {:#subdebate-94-194} #### General Administrative and Other Expenditure Included under this heading are the administrative expenses of the Department of Primary Industry ($15.0 million) and the Bureau of Agricultural Economics ($5.5 million). Also included is $0.9 million for the Commonwealth contribution to the Australian Plague Locust Commission. {:#subdebate-94-195} #### Mining Industry {:#subdebate-94-196} #### Uranium - Exploration and Development On 9 January 1979 the Commonwealth entered into an agreement with Peko Mines Ltd, the Electrolytic Zinc Company of Australasia Ltd and the Australian Atomic Energy Commission relating to the Ranger uranium project. Outlays in 1978-79 in respect of this project ($17.1 million) related to commitments to be met by the Commission before implementation of borrowing arrangements. An amount of $50 000, which is to be recouped during 1979-80 from the Ranger Joint Venturers, has been included in this item to meet the cost of the Ranger Assessor, who will periodically estimate the cost of rehabilitation of the Ranger project area. The Memorandum of Understanding between the Commonwealth and the Northern Territory provides that the Commonwealth will reimburse the Northern Territory Government for additional capital or other expenditure arising from uranium developments to the extent that such expenditure is incurred by the Northern Territory Government in accordance with prior specific arrangements agreed between the two governments. In 1979-80 an amount of S1.0 million is estimated as a contribution toward social infrastructure costs at Jabiru Township under this arrangement. An amount of S270 000 is included for the re-imbursement of the Northern Territory Government for non-environmental uranium mining regulatory services to be provided on behalf of the Commonwealth. In 1978-79 expenditure for this purpose was about SI 5 000. Payments by the Commonwealth of approximately $650 000 are to be made to the Northern Land Council in 1979-80 in relation to the Ranger Uranium Project and in accordance with the Agreement under Section 44 of the *Aboriginal Land Rights (Northern Territory) Act* 1976; offsetting revenue of an equivalent amount will be received from the Ranger Joint Venturers. A provision of $291 000 has been included for the Australian Uranium Export Office, which was established in 1978 to provide advice relating to the Commonwealth's uranium export policies. {:#subdebate-94-197} #### Bureau of Mineral Resources The Budget includes $13.6 million for the on-going activities of the Bureau of Mineral Resources, Geology and Geophysics in 1979-80 compared with expenditure of $12.9 million in 1978-79. *Other Mining (net)* Expenditure on coal research is recorded under this heading. In 1979-80 expenditure for this purpose is estimated at $6 million and will be financed from the proceeds of a 5 cent per tonne levy on coal production and from receipts, on an equivalent basis, from Victorian and South Australian State authorities in respect of their coal production. Other provisions include SI. 9 million payable by the Commonwealth in respect of royalty payments for minerals (other than uranium) mined on Aboriginal land in the Northern Territory; SI. 4 million to be provided to the NSW Government to support the operations of the Chrysotile Corporation of Australia; $0.9 million for the Commonwealth's contribution towards the administrative costs of the Joint Coal Board; $0.7 million for Australia's contribution to several international commodity organisations; and a net $0.3 million towards the cost of a joint study with West Germany of the feasibility of establishing a coal liquefaction plant in Australia. Net repayments in 1979-80 by the Tasmanian Government in respect of advances to the Mount Lyell Mining and Railway Company Limited are estimated at S2.4 million. {:#subdebate-94-198} #### Manufacturing Industry *Shipbuilding A* *ssistance* Assistance is payable in respect of the construction of vessels in Australia following a case-by-case examination by the Australian Shipbuilding Board. Assistance for new shipbuilding contracts is provided under the *Ship Construction Bounty Act* 1975 as a direct bounty to shipbuilders. The maximum level of assistance is currently 29 per cent but the Government's shipbuilding policy provides for a phased reduction in the level to an eventual long-term rate of 25 per cent by December 1980. Outlays under this scheme in 1979-80 are estimated at SI 0.1 million and represent subsidies towards the construction of 33 ships. The terms and conditions of the bounty will be reviewed following consideration of the final Industries Assistance Commission report on *Ships, Boats and Other Vessels not Exceeding 6000 Tons Gross Register.* Prior to the enactment of the bounty legislation in June 1975 a shipbuilding subsidy was provided by means of the Commonwealth buying ships and then selling them to ship owners at a lower price. It is expected that the final 10 ships, construction or modification of which are to be subsidised under those arrangements, will be completed in 1979-80 at a net cost to the Budget of SI. 4 million. An amount of $1.1 million is provided for the administrative expenses of the Shipbuilding Board. {:#subdebate-94-199} #### Industrial Research and Development The *Industrial Research and Development Incentives Act* 1976 was amended in 1978 to provide for increased assistance for research and development activities by industry. Grant rates for commencement grants (intended to encourage the build up of research and development capability), and the maximum grant rates for specific project grants, have been increased from 25 per cent to 50 per cent. The maximum annual grant payable to an individual company was increased to $25 000 for commencement grants and $500 000 for project grants. Funds have been provided for the support of major industrial research projects which are considered to be in the public interest and for pilot programs. Outlays are estimated to increase from $24 million in 1978-79 to $32 million in 1979-80. {:#subdebate-94-200} #### Agricultural Tractors Bounty Under the *Bounty (Agricultural Tractors) Act* 1966 assistance is payable to eligible producers of certain agricultural wheeled tractors. The rates of bounty are indexed quarterly and currently range from $811 to $5483 per tractor depending on the power of the tractor and subject to local content provisions. {:#subdebate-94-201} #### Machine Tools Bounty Following a review by the Industries Assistance Commission, bounty assistance is to be provided until 30 June 1984 to Australian manufacturers of non-portable power operated metal working machine tools, at a rate of 33 1/3 per cent of factory cost, subject to certain local content requirements. In addition a bounty, at the rate of 25 per cent of design costs incurred in Australia, is payable to Australian manufacturers involved in the design of machines covered by the Act. The *Bounty (Metal Working Machine Tools) Act* 1978 combines and broadens the scope of payments of the former *Metal Working Machine Tools* *Bounty Act* 1972 and the *Bounty (Drilling Machines) Act* 1978, both of which provided for bounty payments on certain categories of machine tools and expired on 30 June 1979. Bounty payments are estimated at SIO million in 1979-80 compared with $7.1 million in 1978-79; the increase reflects some large orders which are currently in the course of production. {:#subdebate-94-202} #### Book Bounty Under the *Bounty (Books) Act* 1969, which was to have expired on 31 December 1979, a bounty is paid at the rate of 33 1/3 per cent of the cost of production of eligible books manufactured in Australia. Following a review by the Industries Assistance Commission, the bounty assistance has been extended for a further seven years from 1 January 1980. The amended Act provides for the rate of bounty to be gradually phased down to 25 per cent by 1 January 1984 and makes certain changes to the eligibility criteria, mainly in respect of categories of eligible publications and the size of production runs. Australian book production eligible for bounty continued to increase in 1978-79 and resulted in bounty payments of $12.5 million. The increase in expenditure to $13.8 million in 1979-80 mainly reflects production cost rises. {:#subdebate-94-203} #### Heavy Commercial Vehicles Bounty The *Bounty (Commercial Motor Vehicles) Act* 1978 provides for bounty payments on prescribed components used as original equipment in the assembly of certain general purpose vehicles, including buses. Bounty is payable at the rate of 20 per cent of the into-store value of eligible components. Payments in 1978- 79 amounted to $2.4 million; $6 million has been provided for 1979-80 to meet an expected increase in production, and carryover from late claimants. {:#subdebate-94-204} #### Other Bounty Payments Under the *Automatic Data Processing Equipment Bounty Act* 1977, bounty is to be payable for a period of seven years on eligible equipment, with the bounty rate being phased down gradually over that period to 7.5 per cent. Payments in 1979- 80 are estimated at $1.5 million, compared with $0.7 million for 1978-79. The *Bounty (Bed Sheeting) Act* 1977 now provides for a maximum payment of $0.6 million per year. Following a review by the Industries Assistance Commission, the eligibility criteria in respect of bountiable sheeting have been revised to enable sheeting made up into bed linen by a person other than the manufacturer to qualify for the bounty. Payments in 1979-80 are estimated at $0.6 million. The *Bounty (Polyester-Cotton Yarn) Act* 1978 provides for the payment of bounty on the production of yarn, up to a maximum of $0.6 million a year. This bounty is due to expire on 31 August 1980 but the Government has announced an intention to extend the bounty for 12 months, in line with advice from the Industries Assistance Commission. An amount of $0.6 million has been provided for payments in 1979-80. The *Bounty (Rotary Cultivators) Act* 1979 provides for the payment of bounty on the production of self-propelled pedestrian operated rotary cultivators, hoes and tillers, up to a maximum' of $60 000 a year. The scheme commenced on 5 February 1979 and is to operate until after a decision is taken on the Industries Assistance Commission's final report on this equipment. Provision is made for $60 000 in 1979-80. Following a review by the Industries Assistance Commission, assistance is being provided to eligible Australian manufacturers of certain types of paper. Under the *Bounty (Paper) Act* 1979, bounty is payable at the rate of $90 per tonne on specified coated paper and $70 per tonne on specified uncoated paper up to a maximum of $2.5 million per year until 5 February 1987. Payments in 1979-80 are estimated at $2.5 million. The *Bounty (Dental Alloys) Act* 1979 provides for the payment of bounty on the production and sale in Australia of certain dental alloys up to a maximum of $45 000 per year. The scheme commenced on 22 December 1978 and is to cease on 21 December 1979. Payments in 1979-80 are estimated at $36000. Following a review by the Industries Assistance Commission, tariff assistance on injection moulding equipment has been reduced and transitional bounty assistance phasing down over five years has been provided to assist restructuring in the industry. The *Bounty (Injection Moulding Equipment) Act* 1979 provides for the payment of a bounty at the rate of 45 per cent of the value added by Australian manufacturers of eligible equipment and for this rate to be reduced by 10 percentage points each year during the five year period to which the Act applies. Payments in 1979-80 are estimated at $1.35 million. {:#subdebate-94-205} #### Export Incentives *A* new system of export incentives - the Export Expansion Grants Scheme - was introduced last year to operate from 1 July 1977. In general, payments are based on increases in the value of exports of eligible goods and services in the grant year over the average value for the previous three years. Payments in respect of the 1977-78 grant year are estimated at about $130 million, of which an amount of $20 million was paid in 1978-79. The 1979-80 Budget provision of $170 million is to pay outstanding claims for the 1977-78 grant year and part of the claims for the 1978-79 grant year. The earlier Payroll Tax Rebate Scheme and Export Incentives Scheme were discontinued in 1971 and 1974 respectively although a few minor payments in respect of outstanding claims under those schemes were made in 1978-79. {:#subdebate-94-206} #### Export Market Development Grants The Export Market Development Grants Scheme is designed to encourage exporters and prospective exporters to seek out and develop overseas markets. In 1978-79, following an Industries Assistance Commission report, changes were made to the Scheme to extend its coverage - including, under special provisions, to the tourist industry - and to simplfy its administration. Payments under the revised scheme commence in 1979-80 and are estimated at $45 million, compared with 1978-79 outlays of $38 million under the previous scheme. {:#subdebate-94-207} #### Launceston Precision Tool Annexe It is proposed that an amount of $0.3 million be offered to the Tasmanian Government to facilitate the re-establishment of the Launceston Precision Tool Annexe. The amount would be repayable over 10 years with interest at the long term bond rate. {:#subdebate-94-208} #### Development of Microwave Landing System An amount of $3.7 million has been provided for the second year of a joint Commonwealth/industry program for the commercial development of the Australia-designed INTERSCAN microwave landing system. Commonwealth expenditure under the program relates to a three-year design/ engineering phase. The Australian Industry Development Corporation has formed a company (InterScan Australia Pty Ltd) to provide a vehicle for a consortium of Australian firms to undertake the production/development phase, which is intended to be funded entirely by industry. {:#subdebate-94-209} #### Other Assistance An amount of $1.5 million has been provided as a Commonwealth contribution towards the 'Project Australia' campaign which is directed towards increasing community awareness of Australian skills and potential, and encouraging improvements in product quality, design and marketing. $0.2 million was provided in 1978-79. Other industry support in 1979-80 includes $1.15 million for Productivity Improvement Programs, $0.2 million in support of the Productivity Action Program, a grant of $0.4 million to the Industrial Design Council of Australia, and $0.3 million for the Committee of Inquiry into Technological Change. Also included is a net outlay by the Commonwealth ($0.4 million) in respect of the sale of Commonwealth Brickworks (Canberra) Limited. The purchaser requires the Commonwealth to discharge certain liabilities before settlement ($4.2 million) in return for a cash settlement of $3.8 million. The Brickworks has been a loss operation for several years. *General Administration (net)* This heading covers administrative costs of the Export Market Development Grants Board ($1.1 million) and of the Department of Industry and Commerce ($7.3 million). The latter amount includes $0.2 million for certain support services to small business, including publications, training programs, seminars and awards. The substantially increased allocation for the Australian Tourist Commission is to enable the Commission to extend its promotional campaign and to undertake further research into overseas markets. Funds ($0.2 million) are also being provided for a domestic tourism promotion campaign. This heading also covers an amount of $0.2 million provided for the publicity and general operational expenses of the ACT Tourist Bureau, including funds to enable the Bureau to open an office in Sydney. {:#subdebate-94-210} #### Petroleum Products Subsidy Scheme This scheme, established by an amendment in 1978 to the *States Grants (Petroleum Products) Act* 1965, provides for the payment of a subsidy, similar to that which operated under the Act from 1965 to 1974, on the cost of distributing motor spirit, power kerosene, aviation fuels and automotive distillate. The effect of this subsidy is that country consumers of these products pay a price which includes not more than 0.88 cents per litre of freight differential costs. The present scheme was introduced progressively, in the States and Northern Territory, from May 1978 and was operational nation-wide from 1 July 1978. The increase of $13.7 million in 1979-80 reflects the forecast levels of consumption and freight differentials for eligible products. {:#subdebate-94-211} #### Energy Research and Conservation Government funds for energy research and development are disbursed by the Minister for National Development in the light of advice from the National Energy Research, Development and Demonstration Council. The Budget provision for these purposes has been increased by $5.1 million to $9.1 million in 1979-80. In addition, as part of its national energy conservation policy, the Commonwealth is to initiate a National Energy Conservation Publicity Campaign. A provision of $1 million has been made for the campaign which is to start in October 1979. Certain States have also agreed to provide a total of $1 million toward the cost of the campaign. A further amount of $70 000 is provided for activities associated with the International Energy Conservation Month (October 1979). {:#subdebate-94-212} #### Australian Industry Development Corporation The Australian Industry Development Corporation's paid-up capital at 30 June 1979 was $62.5 million; no additional capital is planned to be provided in 1979-80. Under the *Loans (Australian Industry Development Corporation) Act* 1974, funds were borrowed overseas on behalf of the AIDC in 1975-76. Repayments from the Corporation in respect of these loans are estimated at $31.6 million in 1979-80. These amounts are, in turn, repaid to lenders by the Commonwealth. {:#subdebate-94-213} #### Export and Trade Promotion Outlays on export and trade promotion in 1979-80 are estimated at $22.6 million. This total includes expenditure on the Trade Commissioner Service ($15.9 million), matching grants to primary product marketing boards ($1.1 million), trade publicity fairs, displays and trade promotion visits ($5.5 million) and costs associated with Australia's hosting of a conference of the International Tin Council ($60 000). Resident Trade Commissioners are to be appointed in Caracas (Venezuela) and Algiers (Algeria) during 1979-80. {:#subdebate-94-214} #### Export Finance and Insurance Corporation The Export Finance and Insurance Corporation (EFIC) provides export credit insurance and guarantee facilities, insurance cover for direct investment overseas against non-commercial risks and, where necessary, export finance for medium and long-term credit sales of capital goods. EFIC's export finance facility is financed by trading bank loans at commercial rates of interest. The Corporation on-lends these funds to foreign buyers at concessional interest rates. The difference between the commercial rates at which EFIC borrows and the rates at which it on-lends is met from the Budget by way of an interest rate subsidy payment to EFIC each year. The subsidy payment was $1.5 million in 1978-79 and is estimated to increase to $2.6 million in 1979-80. The 'subsidy commitment authority', the mechanism to control future commitments on the Budget, has been increased from $30 million to $36 million. At 30 June 1979, the Corporation had entered into loans in support of capital goods exports aggregating $167.1 million and involving contingent subsidy commitment authority to the extent of about $27.4 million. In addition, the Corporation had made advance commitments to enter into loans of $3.2 million, involving use of a further $340 000 of subsidy commitment authority. {:#subdebate-94-215} #### Other Assistance This item includes $375 000 for the promotion of Australian consultancy services in developing countries, and $1.0 million for the second and final instalment of the capital of the Australian Overseas Projects Corporation. The Corporation, which was established by the *Australian Overseas Projects Corporation Act* 1978, seeks to assist Australian industry to compete for large-scale development projects overseas and operates as a small specialist organisation functioning on a commercial basis. Industry Assistance Through the Taxation System A considerable amount of assistance has been provided to industries over the years by means of various special taxation concessions. The main concessions that have operated in recent years are investment allowances, double depreciation and trading stock valuation adjustment, all of which affect a wide spectrum of industry, while special allowances have benefited primary production and mining industries. The investment allowance, which applies to a wide range of plant and equipment, including leased plant, is a deduction equal to 40 per cent of the cost of plant purchased under a contract made in the period 1 January 1976 to 30 June 1978, and 20 per cent of the cost of plant ordered in the period 1 July 1978 to 30 June 1985. The 40 per cent allowance which applies to plant ordered prior to 1 July 1978 that is completed and first used by 30 June 1979, also applies in the case of partly-completed plant to so much of the expenditure incurred on that plant as is attributable to its installation as at 3 June 1979. Double depreciation applied to new plant and equipment first used or installed for use by taxpayers in the manufacturing and primary production industry sectors on or after 1 July 1974 and before 1 July 1975. The double depreciation scheme also applied in 1975-76 and was extended in coverage, but was discontinued after the 1975-76 income year. The trading stock valuation adjustment is a special deduction equal to a prescribed percentage of most classes of trading stock including livestock. The prescribed percentage is based on half the percentage increase in the goods component of the Consumer Price Index between the June quarter prior to the year of income and the June quarter of the year of income and is applied to the value of the trading stock at the commencement of the year. The adjustment was terminated with effect from the 1979-80 income year. Such concessions result in a reduction of, or a delay in the receipt of, Commonwealth revenue (and a corresponding increase in the funds available to the recipients). They are, in fact, as much a call on the Budget as equivalent direct outlays would be, and for this reason have sometimes been described as disguised expenditures. Assistance of this type through the taxation system has been provided mainly by way of income tax concessions which permit firms and individuals to make deductions from their assessable income additional to those authorised under the general provisions of the income tax law. The amount of revenue forgone in 1978-79 through the main taxation concessions is estimated to have been in excess of $770 million. Details are shown below. Most of the relevant concessions in the income tax field may be grouped in three broad categories, namely: A - those allowing the deduction of amounts that are not authorised under the general provisions of the law; B - those allowing certain taxpayers to deduct the cost of items of plant over shorter periods than is the case for the general run of taxpayers; and C - those exempting certain classes of income; now confined to exemption of income from gold mining. The estimated amounts of revenue forgone in 1978-79 under the main provisions in categories A and B are shown in the following table. A miscellany of other provisions is not included, in some cases because of lack of data on revenue forgone or questions about the extent to which they may properly be regarded as wholly 'Industry Assistance'. These provisions include the rebates allowed to shareholders in respect of capital subscribed for off-shore petroleum exploration and mining (conditional on the company forgoing certain deductions); the concession whereby primary producers are allowed to adopt artificially low values for natural increase in their livestock accounts for taxation purposes; drought bonds and income equalisation deposits; and the accelerated depreciation of expenditure on employees' amenities. The averaging provisions applied to primary producers are also not included. Under the averaging provisions, primary producers effectively have their income from primary production taxed at rates corresponding to their average income (for the current and preceding four years) in a year when average income is less than taxable income. Depending on the amount of their income not derived from primary production, some or all of that income may also be effectively taxed at the lower rates corresponding to average income. The purpose of the provisions is to ensure that fluctuations in income in conjunction with progression in rates of tax do not lead to those taxpayers bearing higher tax rates than other taxpayers having incomes which, over a period of years, are comparable but non-fluctuating. The effects go beyond that when there is an upward (e.g. inflationary) trend in money incomes over a number of years since, even if fluctuations in income are superimposed on that trend, the averaging provisions result in the taxpayers covered by them bearing lower tax rates than other taxpayers whose incomes over an equal period of years are comparable. Furthermore, even in the absence of an upward trend in income the provisions introduced in 1977-78 do more than remove the effect on tax of fluctuations in income, as averaging is applied only in years when to do so benefits the taxpayer, and tax is calculated at ordinary rates in other years. {: type="A" start="D"} 0. LABOUR AND EMPLOYMENT Outlays under this heading provide for various programs relating to the prevention and settlement of industrial disputes, the enforcement of industrial awards and agreements, manpower and training schemes, employment services and immigration. These outlays are estimated to total $328.1 million in 1979-80, a decrease of 2.0 per cent compared with 1978-79: {:#subdebate-94-216} #### Industrial Relations and Employment {:#subdebate-94-217} #### Conciliation and Arbitration The provision of $7.1 million covers the operations of the Conciliation and Arbitration Commission, the Public Service Arbitrator and the Remuneration Tribunal. It allows for some increase in levels of activity and for the full year effect of salary increases in 1978-79. {:#subdebate-94-218} #### Industrial Relations Bureau The Industrial Relations Bureau was established in March 1978 to facilitate the general supervision and observance of federal industrial law. The provision of $3.9 million in 1979-80 is for the administrative and operational expenses of the Bureau. {:#subdebate-94-219} #### Payment to Stevedoring Industry This provision represents the payment to the Stevedoring Industry Finance Committee of receipts from a levy imposed on stevedoring employers, under the *Stevedoring Industry Levy Act* 1977. These funds are used by the Committee to meet certain payments in respect of waterside workers, including contributions to the employees' retirement fund. The 1979-80 estimate is S0.2 million less than 1978-79 expenditure; an estimated decrease in man hours to be worked (due to improved cargo handling methods) is largely offset by the full year effect of the increase in the levy imposed on 1 December 1978. {:#subdebate-94-220} #### Apprenticeship Training Assistance for apprenticeship training is provided by the Commonwealth under a number of schemes. These seek to promote apprenticeship opportunities, to improve the standard of apprenticeship training in industry and to increase the future supply of skilled tradesmen. Proposed expenditure on the main schemes in 1979-80 is summarised in the following table. The Commonwealth Rebate for Apprentice Full-Time Training (CRAFT), introduced in January 1977, compensates employers through tax-exempt rebates for the costs of releasing apprentices to attend (or to study for) basic trade courses provided by technical education institutions in any year of apprenticeship, or to attend full-time, off-the-job training courses in their first three years of apprenticeship. Rebates are set at $13 a day for attendance by apprentices completing any stage of a basic trade course in the first year of apprenticeship, increasing to $17 a day for stages 3 and 4, if not completed in the first year. Full-time off-the-job training rebates are payable to employers at $6.50 a day for the release of apprentices to attend approved full-time instruction at their own or other training centres. Assistance is also available toward the costs of approved training centres operated by groups of small firms. At present only 5 per cent of apprentices are receiving off-the-job training. Both rebates are indexed to annual movements in wages with effect from 1 January each year. Weekly living-away-from-home allowances of $21 for first year apprentices and $8 for persons in the second year of their apprenticeship are also provided in certain circumstances. These allowances are not tax exempt. The $25.9 million increase in the 1979-80 provision for CRAFT reflects the continuing build-up of eligible apprentices from successive intakes since the commencement of the scheme. In 1979-80 technical education rebate claims, the major component of expenditure under the scheme, are expected to be paid for about 85 000 apprentices, compared with about 56 000 apprentices in 1978-79. An amount of $840 000 is provided to meet the award costs of apprentices, surplus to normal requirements, who are undergoing the full term of their training in Commonwealth and State Government establishments. The number of apprentices trained by the Commonwealth and States under the Group One Year Training Scheme is expected to continue at the present level of about 280 in 1980. Under this Scheme, apprentices sponsored by private employers receive full-time training in Commonwealth and State Government Departments for the whole of their first year. The costs (including wages) of this training are met in full by the Commonwealth. At the end of the first year the apprentices commence work with their employers. {:#subdebate-94-221} #### Employment Training Schemes *A* total provision of $74.4 million has been made for training schemes in 1979-80, compared with expenditure of $122.4 million in 1978-79. The decrease of $48.1 million is largely in respect of the National Employment and Training System (NEAT) and reflects decisions announced by the Government in the 1978-79 Budget and subsequently to tighten the guidelines of the Special Youth Employment Training Program (SYETP) so that subsidies were paid only to people who would not otherwise have been employed. Estimated expenditure on the main schemes in 1979-80 is shown below, together with 1978-79 expenditures: {: type="a" start="a"} 0. Excluding allowances for trainees paid under NEAT. *National Employment and Training System (NEAT)* The objectives of NEAT are: to provide assistance on an individual basis which enables training to be undertaken towards employment in occupations which are in demand; to offset employment problems being experienced by groups of persons by providing specifically designed training programs; and to contribute to the supply of skills identified as being in short supply by the provision of specialised training programs. Under NEAT assistance is provided to eligible trainees undertaking (and employers and training organisations providing) on-the-job, full-time or part-time training for skills in demand in the labour market. It is estimated that 80 000 people will participate in the NEAT System during 1979-80, compared with about 97 000 in 1978-79. Employers providing on-the-job training currently receive subsidies of $57.40 a week for adults and $42.10 a week for juniors (other than those receiving training under SYETP - see below). These rates are adjusted in January each year in line with movements in the Male Adult Average Award Wage. Allowances paid to full-time NEAT trainees comprise a component equivalent to the unemployment benefit (income tested) and a training component equivalent to 20 per cent of the Male Adult Average Award Wage (or 10 per cent if under 18 years). The training component is paid only where the weekly income of the trainee and/or spouse is less than 1.5 times Average Weekly Earnings (male adult unit). Part-time trainees who are not in full-time employment receive an allowance equal to the training component of the full-time allowance. In addition, the cost of essential books and equipment (up to $220 a year) and fees are reimbursed. SYETP provides employment training for the young unemployed who have been out of employment or full-time education for four of the previous twelve months by subsidising the wage costs to employers providing on-the-job training. The period of training under SYETP is four months and the wage subsidy payable to employers is $45 a week, or the award wage if less. Of the estimated total throughput of about 80 000 trainees under NEAT- in 1979-80 about 40 000 are expected to receive training under SYETP. As mentioned earlier, the reduction in expenditure under NEAT results largely from the more stringent eligibility criteria introduced for SYETP during 1978-79. {:#subdebate-94-222} #### Education Program for Unemployed Youth Under this Program the Commonwealth provides funds to the States to conduct courses to improve the skills and motivation of the young unemployed, particularly those with low or inadequate educational qualifications. Funds totalling $3.5 million will be provided to the States for this scheme in 1979-80, together with $213 000 for the Australian Capital Territory and the Northern Territory. In addition, $2.5 million will be provided by way of allowances to participants in the courses; these allowances, which are recorded under NEAT, are equivalent to unemployment benefits (plus an incidentals allowance of $6 a week in the States and the NT and $4 a week in the ACT). *Training in Industry and Commerce* Assistance for training in industry and commerce is provided under programs designed to encourage the development of training in the private sector (and particularly the employment of manpower training specialists), the training of instructors and training officers, the development of better training programs and the development of training in small firms. These programs are expected to cost $2.4 million in 1979-80, an increase of $1.2 million over 1978-79. {:#subdebate-94-223} #### Other The Government has decided to proceed in conjunction with community groups with the development of a program of pilot projects in a Voluntary Youth Program to enable unemployed young people to engage in voluntary community services. An amount of $200 000 has been provided in 1979-80 for this purpose. {:#subdebate-94-224} #### General Administration Separate Departments of Employment and Youth Affairs and of Industrial Relations were created on 5 December 1978 to administer certain functions of the former Departments of Employment and Industrial Relations and Environment, Housing and Community Development. Expenditure on administrative and other costs of the Department of Industrial Relations is estimated at $5.7 million in 1979-80. Similar costs in respect of the Department of Employment and Youth Affairs, including the costs of the Commonwealth Employment Service, are estimated at $101.5 million in 1979-80. Overall general administrative expenditure is estimated to increase by $15.5 million, reflecting in large part the full-year costs of a significant increase in staff in the Commonwealth Employment Service approved in 1978-79. {:#subdebate-94-225} #### Immigration Program The triennial immigration program, which commenced in 1978-79, provided for a projected annual average net gain of 70 000 settlers during each of the initial three years. The net migration intake in 1978-79 was 57 000. Eligibility is based on the Numerical Multi-factor Assessment System which gives weight to such factors as family ties, occupational skills in demand, literacy in the mother tongue, and knowledge of English. Certain categories of refugees are also eligible. {:#subdebate-94-226} #### Assisted Migration Assisted passages will be available for some 23 500 people in 1979-80 compared with approximately 19 000 in 1978-79. The figure for 1979-80 includes up to 14 000 Indo-Chinese refugees, compared with 12 000 in 1978-79. Expenditure on assisted migration is estimated at $17.6 million, compared with expenditure of $16 million in 1978-79. The main components of the assisted migration program in 1979-80 are embarkation and passage costs ($7.6 million) and transitory accommodation ($8.9 million"! {:#subdebate-94-227} #### Administration Administrative expenditure of the Department of Immigration and Ethnic Affairs in 1979-80 is estimated at $35.2 million, an increase of $2.9 million on 1978-79; this mainly reflects increases in salaries and other costs. {:#subdebate-94-228} #### Recoveries Contributions by assisted migrants towards passage costs are estimated at $750 000 in 1979-80, compared with $690 000 in 1978-79. The Government has decided to introduce charges for a number of the services provided by the Department of Immigration and Ethnic Affairs. Revenue from these new charges is estimated at $2.3 million in 1979-80 and $4 million in a full year. {: type="A" start="E"} 0. OTHER ECONOMIC SERVICES This heading covers economic services which are not readily categorised elsewhere. It includes outlays for certain forms of economic and trade regulation, and for specialised activities and administrative expenses not directly identifiable with specific industries or groups of industries. {:#subdebate-94-229} #### Economic and Trade Regulation Provisions for the various regulatory bodies listed under this heading generally allow for maintenance of existing levels of activity. The increase of $0.7 million in funding requirements for the Patents Office is more than offset by expected additional revenue (included under 'Recoveries') of $1.5 million from increased Patents Office activity and increases in scheduled Patents Office fees effective 1 July 1979. {:#subdebate-94-230} #### Specialised Activities The main provision under this heading in 1979-80 is for Meteorological Services ($43.6 million). The increased provision for this service is the net outcome of general price increases on the one hand and, on the other, of economies achieved by the Bureau of Meteorology through the reorganisation of its communications network. Recoveries are estimated at $10.7 million in 1979-80 and consist of receipts by the Bureau for services provided, particularly for civil aviation and defence purposes. The decrease of $3.9 million reflects a change in the basis of calculating charges so as to relate revenues more closely to the expenditures directly associated with the provision of these services. {:#subdebate-94-231} #### General Administrative and Other Expenditure These outlays relate to operating and capital costs of the Departments of Trade and Resources, National Development, Business and Consumer Affairs, Productivity and the Special Trade Representative. The increase in 1979-80 mainly reflects the effects of increases in wages and salaries and other administrative costs. {: type="1" start="9"} 0. GENERAL PUBLIC SERVICES This broad heading covers a range of general public services and activities concerned with the organisation and operation of the Commonwealth Government, including legislative services, administrative services, the maintenance of law and order and foreign affairs and overseas aid. {: type="A" start="A"} 0. LEGISLATIVE SERVICES Outlays on legislative services are estimated to increase by 12.7 per cent in 1979-80, to $79.1 million. {:#subdebate-94-232} #### Parliamentary Expenditure Outlays under 'Other' are for salaries, administrative costs and capital works associated with the functioning of Parliament and for the administrative costs of electorate offices of Senators and Members. Of the total increase of $5.9 million, $3.3 million relates to increased salary and allowance payments (including $1.2 million for Parliamentary and Ministerial staff, reflecting the expected full utilization in 1979-80 of staff entitlements for Senators and Members). An amount of $0.7 million has been included for the use of the new Boeing 707 VIP aircraft on ministerial travel overseas. A provision of $0.6 million has been included for the Parliament House Construction Authority for its first full year of operations and for costs associated with a new Parliament House design competition and related activities. In addition, $1.1 million (an increase of $0.5 million) has been provided for ongoing and new works for the present Parliament House. *ACT House of Assembly* This item covers salaries and administrative costs of the Australian Capital Territory House of Assembly. The increase reflects increases in the fees and allowances for Members of the Assembly approved in July 1979 following recommendations by the Remuneration Tribunal. *NT Legislative Assembly* The Northern Territory became a self-governing territory on 1 July 1978 and funding of legislative activities apart from the Administrator is now the responsibility of the Northern Territory of Australia. {:#subdebate-94-233} #### Australian Electoral Office The net costs of administration of the *Commonwealth Electoral Act,* the conduct of Commonwealth elections and referenda and industrial elections by the Australian Electoral Office are included here. Administrative costs of the Office are estimated to increase by $2.7 million in 1979-80; this largely reflects the cost of transferring electoral enrolments to an improved computer system ($0.4 million) and increased staffing and associated expenses ($1.8 million). {: type="A" start="B"} 0. LAW, ORDER AND PUBLIC SAFETY Commonwealth outlays on law, order and public safety are estimated to total $197.6 million in 1979-80, an increase of 14.4 per cent. {:#subdebate-94-234} #### Courts and Legal Services {:#subdebate-94-235} #### Federal Court The Federal Court of Australia was created in December 1976 with powers to exercise original jurisdiction and to perform appeal functions in the Federal area. Operating costs of the Court in 1979-80 are estimated at $2.1 million. {:#subdebate-94-236} #### High Court Of the $17.9 million provided for the High Court in 1979-80, $15.6 million has been included for the construction and fitting out of the new High Court building in Canberra, the opening of which is planned for May 1980. In addition, $2.3 million (an increase of $0.7 million) is provided for the operating costs of the High Court in 1979-80. {:#subdebate-94-237} #### Commonwealth-State Law Courts Only minor payments relating to the Commonwealth's share (about 45 per cent) of the construction costs of a joint Commonwealth/New South Wales court complex in Sydney, which was completed in 1977-78, remain to be made. {:#subdebate-94-238} #### Crown Solicitor The increase of $0.9 million under this heading relates mainly to wage and salary costs. {:#subdebate-94-239} #### Legal Aid The estimated increase of $4.2 million is mainly in respect of higher payments to private legal practitioners (SI. 8 million), Aboriginal legal aid (S0.6 million), and grants to voluntary legal aid bodies ($0.2 million). The balance of the increase reflects higher wage and salary costs and the Commonwealth's share of the establishment costs of legal aid commissions, which are expected to come into operation in three States during 1979-80. {:#subdebate-94-240} #### Family Law The 1979-80 provision of SI 1.8 million (an increase of Sl.l million), reflects higher re-imbursements to the States (including Western Australia, which has established its own Family Court) for family services provided in the federal area ($0.2 million) and increases in staff numbers and salaries, including for Judges ($0.9 million). {:#subdebate-94-241} #### Protection of Human Rights The provision of $0.4 million in 1979-80 is for the continuation of the Commonwealth's community relations activities. {:#subdebate-94-242} #### Police, Security and Detention {:#subdebate-94-243} #### Security Services and Organisations The estimate covers outlays by the Australian Security Intelligence Organisation ($14.2 million), and the Australian Secret Intelligence Service ($8.3 million). {:#subdebate-94-244} #### Police and Prison Services This provision is for police and prison services in the Australian Capital Territory ($4.0 million) and for the operations of the Commonwealth Police Force ($11.6 million) to 30 September 1979. From that date these two police forces will be amalgamated to form the Australian Federal Police Force, and $44.9 million has been included in the estimates for the operation of this force from 1 October 1979. The increase of $6.6 million reflects rises in costs of on-going functions, increases in training activities and the costs associated with establishing the Australian Federal Police. {:#subdebate-94-245} #### Other Provision is made for the operation of the Institute of Criminology ($1.1 million), the Office of National Assessments (SI. 3 million), the Commonwealth's contribution towards administrative expenses of the Central Fingerprint Bureau and contributions to international criminology organisations. {:#subdebate-94-246} #### Attorney-General's Department {:#subdebate-94-247} #### General Administrative and Other Expenditure The increase of $2.2 million mainly reflects increases in staff and salaries ($1.2 million), and the provision of an additional $0.4 million for the Commonwealth's contributions to the running costs of the joint Commonwealth-State Law Courts Building in Sydney and the cost of the joint law courts library facility. {:#subdebate-94-248} #### Public Safety and Protection {:#subdebate-94-249} #### Road Safety and Other The Commonwealth is providing $780 000 in 1979-80 for road safety promotion and research through the Office of Road Safety, along with a grant to the States of $150 000 for promotion of road safety practices. Included under 'Other' are the operating expenses of the ACT Fire Brigade ($3.2 million) and fire protection services for Commonwealth property ($1.7 million). {:#subdebate-94-250} #### Building, Works and Equipment Nec The estimates provide mainly for construction of the ACT Family and Juvenile Courts, the ACT Police College and Services Centre and new courts in Alice Springs. {:#subdebate-94-251} #### Recoveries These comprise a range of minor recoveries including court fees ($2.9 million), miscellaneous recoveries by the Attorney-General's Department, principally commission on debt recoveries ($1.5 million), and payments by statutory authorities for fire protection provided by the Commonwealth ($0.6 million). {: type="A" start="C"} 0. FOREIGN AFFAIRS AND OVERSEAS AID Total outlays on foreign affairs and overseas aid are estimated to increase by 6.3 per cent to $645.3 million in 1979-80. This total includes most of the Government's expenditures under policies designed to promote relations with overseas countries and to assist in the economic and social development of developing countries. (About three quarters of expenditure under this heading relates to various overseas economic aid programs to assist developing countries, including Papua New Guinea; a more detailed account of Australia's aid programs is provided in Budget Paper No. 8 *Australia's Overseas Development Assistance* {: type="a" start="a"} 0. Some figures in the table differ slightly from those shown in Budget Paper No. 8 because of the use of different concepts for recording Australia's overseas aid performance. {:#subdebate-94-252} #### Aid Payments An amount of $485.3 million is provided for expenditure on overseas aid in 1979-80, an increase of $29.0 million or 6.3 per cent over 1978-79. Taking into account 'Assistance Additional to Aid Payments' (see below) total assistance to developing countries in 1979-80 is estimated to amount to about $522.3 million. This figure, however, does not include significant amounts spent by the Commonwealth and State Governments on the education and training of several thousand students from developing countries who are attending various tertiary and other training institutions in Australia. The cost to the Australian taxpayer of providing assistance of this kind, which is not brought to account directly under the overseas aid program, is estimated at about $37 million in 1979. Australia also provides other indirect forms of economic aid through its contributions to the regular budgets of a number of international organisations (e.g. United Nations Organisation, the Food and Agriculture Organisation and the World Health Organisation) that assist in the financing of aid projects in developing countries. The aid component of Australia's contributions to these organisations in 1979-80 is estimated at about $3.2 million. Other indirect economic assistance is provided by the Export Finance and Insurance Corporation (EFIC) through the financing, in certain circumstances, of exports of capital goods on concessional terms. The Government, in the national interest, has also assumed large contingent liabilities in relation to developing countries through its support of EFIC activities in export and investment insurance and finance. {:#subdebate-94-253} #### Bilateral Aid {:#subdebate-94-254} #### Papua New Guinea An amount of $237.1 million is provided for expenditure on aid to or on behalf of the Papua New Guinea Government in 1979-80. This is an overall increase of SI. 7 million on 1978-79. Under the terms of an aid agreement negotiated in March 1976, Australia undertook to provide Papua New Guinea with annual payments of $180 million (plus annual supplements to take account of inflation and other factors) for general budgetary assistance over a five-year period commencing with 1976-77. In December 1978 the Government agreed to supplements of $43 million in 1979-80 (an increase of $8 million over 1978-79) and $52 million in 1980-81, bringing the total budgetary grant over the five-year period to $1060 million. Outlays on the provision of education and training assistance under the Australia-Papua New Guinea Education and Training Scheme are estimated at $1.7 million in 1979-80, an increase of 23 per cent over 1978-79. Payments in respect of termination and retirement benefits payable to expatriate officers of former Papua New Guinea Administrations and the Australian Staffing; Assistance Group are estimated at $12.3 million in 1979-80, '$6.4 million less than in 1978-79. These payments are expected to continue to decline over the next few years as the Government's obligations under the relevant legislationrthe *Papua New Guinea (Staffing Assistance) Termination Act* 1976 - are discharged. {:#subdebate-94-255} #### Projects and Disaster Relief Project assistance has expanded rapidly in recent years and reflects substantially increased aid commitments to South Pacific countries and to Indonesia and other member countries of the Association of South-East Asian Nations (ASEAN). The formal aid commitment to ASEAN has been restored to $250 million to provide greater scope for new commitments. The Government has also decided to provide a minimum of $84 million to the South Pacific over the next three years; this represents an increase of 23 per cent over the previous three year pledge which concluded in 1978-79. Expenditure is estimated to increase by $5.7 million in 1979-80 to $103.3 million. This aid is directed towards a diversity of activities including projects, equipment and expert advice aimed at increasing agricultural productivity, providing general infrastructure and improving transport and communication facilities. Bilateral contributions to developing countries for the relief of disasters in 1978-79 amounted to $498 000. {:#subdebate-94-256} #### Training Expenditure on training programs (excluding training provided under the Australia-Papua New Guinea Education and Training Scheme) is estimated at $14.5 million, slightly more than expenditure in 1978-79. This expenditure covers the direct costs of officially sponsored students from developing countries undertaking studies in Australia, together with support for training institutions in some ASEAN and Pacific countries. {:#subdebate-94-257} #### Food Aid Expenditure on bilateral food aid is estimated to increase by $7.6 million to $43.5 million in 1979-80. Part of this increase reflects the higher prices expected to be paid for wheat and flour purchases in 1979-80 compared with 1978- 79 but part also allows for an increase in the quantity of food aid to be provided. It is presently envisaged that 271 500 tonnes of wheat (or wheat equivalent) will be supplied by Australia under the provisions of the Food Aid Convention of the International Wheat Agreement in 1979-80 (an increase of 10 000 tonnes over 1978-79). The budgetary allocation also covers freight costs on food aid provided under the Bilateral Reserve for Emergencies Scheme ($1.5 million) and provides for gifts of some non-grain foods to developing countries ($2.5 million). Australia's food aid contribution to the World Food Program is included under the heading 'United Nations Programs'. {:#subdebate-94-258} #### Other Bilateral Aid Included under this heading in 1979-80 is $3 million for the bilateral component of Australia's total contribution of $US18 million to the Conference on International Economic Co-operation's Special Action Program of $US 1 billion. This Program is designed to assist individual low-income countries facing resource transfer difficulties. The bilateral component of Australia's contribution is being provided in the form of development import grants which allow recipient governments to import developmental goods and services from Australia. The grants are being provided to low-income Commonwealth countries in the region. Support for voluntary aid organisations is estimated at $2.2 million in 1979- 80, $0.2 million more than in 1978-79. Expenditure under this heading includes grants for the Overseas Service Bureau and the Australian Council for Overseas Aid, and direct financial support for small-scale development assistance projects carried out by voluntary aid organisations in developing countries. Australia's contributions to a number of international voluntary aid organisations are also recorded under this heading, including contributions of $0.2 million to the International Planned Parenthood Federation and $0.1 million for the International Committee of the Red Cross. An amount of $0.1 million is included for expenditure on the preservation and development of South Pacific cultures. {:#subdebate-94-259} #### Multilateral Aid The Australian Government supports a wide range of international organisations, including development finance institutions, United Nations agencies and various regional organisations. Payments to these in 1979-80 are estimated at $81.5 million, an increase of $15.0 million on 1978-79. {:#subdebate-94-260} #### International Development Finance Institutions Total payments by Australia to the Asian Development Bank, the World Bank Group, the International Monetary Fund and the International Fund for Agricultural Development are estimated at $42.3 million in 1979-80, compared with $29.6 million in 1978-79. This increase reflects an estimated higher rate of cash disbursement in respect of Australia's contributions to the International Development Association and increased capital subscriptions to the Asian Development Bank. Payments in 1979-80 include capital subscriptions to the International Bank for Reconstruction and Development and the Asian Development Bank ($10.3 million) and contributions to the International Development Association ($20 million), the Asian Development Fund ($7.2 million), the International Monetary Fund ($1.3 million), the International Fund for Agricultural Development ($0.8 million), and to the International Development Association in respect of the multilateral component of Australia's contribution of $US18 million to the Conference on International Economic Co-operation's Special Action Program ($2.7 million). {:#subdebate-94-261} #### United Nations Programs, Regional and Other International Organisations Total payments under this heading are estimated to amount to $39.3 million in 1979-80, an increase of $2.3 million over 1978-79. Australia's contributions to various United Nations aid organisations are estimated at $14.3 million and reflect the maintenance of contributions at about the same levels in 1980 as in 1979. The major recipient organisations are the United Nations Development Program ($7 million), the United Nations High Commissioner for Refugees ($3.8 million) and the United Nations Children's Fund ($2 million). Assistance to regional and other international programs is estimated at $10 million in 1979-80. **Major regional** organisations receiving support include the Economic and Social Commission for Asia and the Pacific, the South Pacific Commission, the South Pacific Bureau for Economic Co-operation, as well as a number of international and regional agricultural research and training centres. Provision also is made here for the Commonwealth Fund for Technical Cooperation, South Pacific regional programs and for the Pacific Forum Line (a shipping enterprise established by several South Pacific countries). Expenditure under the World Food Program is estimated to increase by 24 per cent to $15 million in 1979-80. This should provide for the disbursement of 55 000 tonnes of wheat or wheat equivalent (an increase of 5000 tonnes over 1978-79). The proposed large increase in this program reflects in part Australia's commitment to increase progressively to 20 per cent the proportion of food grain aid channelled through the World Food Program; in part it reflects the higher prices expected to be paid for wheat and flour purchases in 1979-80. The estimate also has regard to Australia's biennial pledge of cash and commodities (other than wheat) of $9.4 million for the calendar years 1979 and 1980, and includes provision for freight costs on food aid to be disbursed through the World Food Program. {:#subdebate-94-262} #### Assistance Additional to Aid Payments Although Australia's Defence Co-operation Program ($28.5 million in 1979-80) represents an extension of our own defence effort, it also supplements the overseas economic aid program to the extent that it releases for development purposes resources that recipient governments might otherwise have set aside for defence purposes. Australia's assistance in this respect is described in the section on Defence Co-operation under the Defence function. In addition, the administrative expenses of the Australian Development Assistance Bureau, estimated at $8.5 million in 1979-80 and recorded under General Administrative Expenditure, represent an integral part of total expenditure on Australia's aid effort. Cocos(Keeling), Christmas and Norfolk Islands (net) This line reflects the net costs of administering these three external territories. The net outlay in respect of each territory is shown below: The $5.9 million reduction in outlays on Cocos (Keeling) Islands reflects the acquisition of the Clunies-Ross estate, at a cost of $6.4 million, in 1978-79. Commonwealth expenditure on Christmas Island, which is estimated at $3.4 million in 1979-80, is recoverable from the Christmas Island Phosphate Commission and the Island's internal revenue. Estimated outlays on Norfolk Island in 1979-80 include an amount of $289 000 for restoration of historical buildings. Membership of International Organisations and other Non-aid Expenditure These outlays arise mainly from Australia's membership of a large number of international and regional organisations. Participation in these organisations entails contributions to the administrative expenses and, in some cases, the functional activities of the organisations involved. Total expenditure for these purposes in 1979-80 is estimated at $25.8 million and includes $6.6 million for the United Nations Organisation, $2.7 million for the World Health Organisation, $1.4 million for the United Nations Food and Agriculture Organisation, $2.0 million for the United Nations Educational, Scientific and Cultural Organisation, $1.7 million for the International Labour Organisation, $2.1 million for the Organisation for Economic Co-operation and Development and $1.7 million towards the cost of the United Nations Interim Force in Lebanon. This heading also includes provision for cultural relations overseas, exchange visits and expenditures by the Australia-Japan Foundation, the Australia-China Council and the Australia-New Zealand Foundation. {:#subdebate-94-263} #### General Administrative Expenditure Outlays on administrative costs of the Department of Foreign Affairs, the Australian Development Assistance Bureau and the Overseas Operations Branch of the Department of Administrative Services are estimated to increase by $8.9 million in 1979-80, to $138.8 million. {:#subdebate-94-264} #### Recoveries and Repayments Recoveries and repayments are estimated at $7.9 million in 1979-80, a decrease of $4.4 million on 1978-79. Included here are repayments in respect of loans provided to the Papua New Guinea and Fiji Governments on concessional terms under the overseas aid program, and expected proceeds from the sale of overseas assets (including $1 million for Australian-owned houses in PNG). {: type="A" start="D"} 0. GENERAL AND SCIENTIFIC RESEARCH NEC The Commonwealth provides funds for a range of scientific, industrial and general research purposes under a number of functional headings such as Defence, Health, Education, Industry Assistance. General and Scientific Research nec covers the activities of the Commonwealth Scientific and Industrial Research Organization, the Australian Atomic Energy Commission and various programs of research undertaken by several Government departments and instrumentalities. Provision also is made here for assistance for research activities funded through the Australian Research Grants Scheme, support for fellowship schemes, and for the establishment and operation of an Australian LANDSAT facility. Total expenditure for 1979-80 is estimated at $267.9 million, an increase of 17.0 per cent over 1978-79. {:#subdebate-94-265} #### Australian Atomic Energy Commission The Commission's functions include research and investigations into matters associated with uranium and atomic energy and the production and sale of radio-isotopes. The total provision for the Commission for 1979-80 is $25.2 million, which is intended to enable the Commission to maintain its 1978-79 level of activity. The Commission also receives funds under the Department of National Development's Energy Research, Development and Demonstration Program. These outlays are included under 'Industry Assistance and Development', as are those relating to the Commission's contributions to the Ranger Joint Venture. {:#subdebate-94-266} #### Commonwealth Scientific and Industrial Research Organization Under a broad statutory charter, which has national objectives as its focus, CSIRO conducts research work in such fields as energy, land use, primary, secondary and tertiary industry matters, and areas of community concern. The total of $192.6 million in 1979-80 provides for the operating and capital costs of on-going activities and the development of some programs commenced in 1978-79 including Australian Fishing Zone research and the operation of an aircraft acquired for research purposes. About half of the increase of $23.4 million is for capital works projects ($12.7 million), the main item being the Australian National Animal Health Laboratory under construction at Geelong. {:#subdebate-94-267} #### Antarctic Division The Antarctic Division of the Department of Science and the Environment administers, organises and provides logistic support for the Australian National Antarctic Research Expeditions which operate from three stations in the Antarctic region and one on Macquarie Island. The stations support scientific research programs in upper atmosphere physics, cosmic ray physics, glaciology, biology, medical science, geology and geophysics. A total amount of $21.5 million is being provided for the Division in 1979-80, compared to $12.2 million in 1978-79. The increase mainly reflects the construction of a new base for the Antarctic Division at Kingston (Tasmania) and increased charter rates for the hire of ships and aircraft. It also allows for continuation of the rebuilding program at the stations. An amount of $100000 is included for the completion of a design study for an Australian owned Antarctic ship. {:#subdebate-94-268} #### Research Grants Assistance is provided through the Australian Research Grants Scheme, the Queen Elizabeth II Fellowships Scheme and the Queen's Fellowship Scheme for research projects by individuals in the physical, chemical, biological and earth sciences, in engineering and applied sciences and in the humanities and social sciences. Grants through the Australian Research Grants Scheme make up some 89 per cent of the research assistance provided. Provision of $0.4 million is also included for a new program of research support for marine sciences and technologies in 1979-80, of which $0.3 million will be for work related to the Great Barrier Reef. {:#subdebate-94-269} #### Australian Institute of Marine Science The Australian Institute of Marine Science was established to carry out research in marine science, both directly and in co-operation with other institutions. An amount of $3.1 million is being provided to the Institute in 1979-80, compared with $2.7 million in 1978-79. The increase relates mainly to the full-year cost of operation of the new 24 metre research vessel ($0.4 million), for repairs and maintenance of buildings and plant ($0.3 million) and for final construction costs of the Institute's laboratory complex near Townsville ($0.2 million); increases have been partly offset by non-recurring payments made in 1978- 79 for the research vessel ($0.3 million). {:#subdebate-94-270} #### Anglo-Australian Telescope Board This item provides for the Australian Government's contribution to the operational costs of the Anglo-Australian 3.9 metre telescope and its associated research facilities. The total cost of operations in 1979-80, which is to be shared equally with the UK Government, is estimated at $2.2 million. {:#subdebate-94-271} #### Australian Institute of Aboriginal Studies The Australian Institute of Aboriginal Studies was established in 1964 to promote, encourage and assist studies and research in relation to the Aboriginal people. The Institute also has a responsibility to monitor the social impact of uranium mining on Aboriginal communities. The provision for the Institute in 1979- 80 is $2.3 million. {:#subdebate-94-272} #### Other Research and Science Expenditure under this heading covers a range of activities associated with the support of scientific research and development in Australia. The increase of $3.6 million is inflated by an excess of receipts over expenditure in 1978-79 of $1.4 million in relation to the Australian operation of NASA stations. The remaining major component of the increase reflects the final establishment costs ($1.1 million) and operational costs ($0.5 million) of the Australian LANDSAT facility. Provision is also made within the total for support of the Australian Science and Technology Council ($417 800) and for the support and development of major scientific facilities in Australia, such as the Nuclear Magnetic Resonance Spectrometer Centre ($115 000) and the Australian Balloon Launching Station ($230 000). In addition, support is provided for the Learned Academies ($465 000), scientific and technical co-operation with other countries ($437 000), the Standards Association of Australia (S2.4 million) and the National Association of Testing Authorities ($708 000). {: type="A" start="E"} 0. ADMINISTRATIVE SERVICES This heading covers general administrative services not allocated to specific functions, as well as a number of common services provided for the general operations of Government. These outlays are estimated to total $947.4 million in 1979-80, an increase of 13.4 per cent. {:#subdebate-94-273} #### Financial Affairs and Fiscal Administration {:#subdebate-94-274} #### Customs and Excise Administration The estimated increase of $9.9 million in these outlays relates mainly to increased salaries and additional staff in the Narcotics Bureau ($4.9 million); increased air-charter costs for surveillance purposes ($1.6 million); and upgrading of customs communications systems ($1.4 million). There are smaller increases in respect of ADP equipment, the replacement of Customs launches and the use of dogs in drug detection work. {:#subdebate-94-275} #### Taxation Administration An additional $19.4 million is provided in 1979-80 for Taxation administration. The increase mainly results from an expanded effort on the part of the Taxation Office to combat tax avoidance and evasion, including an increase in enforcement activity ($7.0 million), an intensification of assessing and income tax review activities ($5.2 milllion) and a further enhancement of centralised computer facilties ($2.4 million). {:#subdebate-94-276} #### Other This heading includes expenditures incurred by the Department of Finance, the Treasury, the Auditor-General's Office and the Grants Commission. Loan flotation expenses associated with the raising of loans in Australia and overseas are estimated to be $5.1 million less than in 1978-79. This reduction is more than offset by increases in salaries and allowances ($3.2 million) and an estimated increase of $3.7 million for upgraded computer facilities for the Department of Finance. Estimated net expenditure from the Royal Australian Mint Trust Account is $1.5 million higher and mainly reflects increased reimbursed payments for coinage metals purchased through the Coinage Trust Account in 1978-79. {:#subdebate-94-277} #### Statistical Services Expenditures associated with the operations of the Australian Bureau of Statistics are the main items included under this heading. The estimated increase of $5.9 million arises mainly from increased salary and allowances costs ($2.9 million), and costs associated with the Construction Industry Survey ($0.6 million) and preparatory work for the 1981 Population Census ($1.4 million). Purchases of computer equipment and the provision of ancillary computer services as an initial part of the Bureau's re-equipment program adds a further $1 million. General Administration of the Territories Outlays under this heading in 1978-79 and 1979-80 are for works and services of a general nature provided in the Australian Capital Territory by the Department of the Capital Territory and the National Capital Development Commission (NCDC) and which are not readily classifiable to other functions. (Outlays in 1977-78 included the expenses of the administration of the Northern Territory prior to self-government). The major components of the estimated increase of $4.3 million in 1979-80 are increased wage and salary costs and additional expenditure on NCDC projects commenced in previous years. Other Administrative Services, nec Included here are the administrative expenses of the Department of the Prime Minister and Cabinet, the Central Office (excluding environmental activities) and the Australian Government Analytical Laboratories of the Department of Science and the Environment, the Department of Administrative Services and the Department of Home Affairs. Also included are expenditures related to the running costs of the Administrative Appeals Tribunal and the Office of the Commonwealth Ombudsman. {:#subdebate-94-278} #### Common Services *Construction Services (net)* Outlays under this heading are mainly for the running costs of the Department of Housing and Construction and include salaries, administrative expenses and consultants' fees. The estimated increase of $8.7 million mainly reflects increases in wages and salaries and other administrative expenditures. {:#subdebate-94-279} #### Commonwealth Offices This heading principally covers expenditures for the construction ($23.8 million) and maintenance ($6.6 million) of Commonwealth offices. The components of the estimated increase in 1979-80 are $5.9 million for construction of offices in the States and $1.4 million for maintenance of offices throughout Australia. {:#subdebate-94-280} #### Printing and Publishing Outlays under this heading are for the salary, administrative and plant and equipment expenses of the Government's printing and publishing activities. The estimated increase of $0.9 million in 1979-80 reflects salary increases and delays in the purchase and delivery of equipment in 1978-79. {:#subdebate-94-281} #### Property Management and Services Costs associated with the maintenance and security of Commonwealth office accommodation and the property survey program for Commonwealth departments and authorities are included here. **Major components** of the estimate are salaries ($19.1 million), contract cleaning ($6.3 million), office services ($11.2 million) and partitioning and associated work in leased office premises ($7.1 million). {:#subdebate-94-282} #### Government Purchasing The major component of this estimate is for salaries ($8.0 million) of staff of the Purchasing Division of the Department of Administrative Services. {:#subdebate-94-283} #### Rent This item covers rental costs for office and other accommodation leased for civil departments. The increase of $8.4 million is accounted for by the full-year costs of leases taken up in 1978-79, increased rentals on existing leases, and proposed expenditures of $2.7 million on new leases in 1979-80. {:#subdebate-94-284} #### Publicity Services Outlays under this heading include provision for the publicity programs undertaken by the Australian Information Service ($4.7 million) as well as support for Film Australia ($3.5 million). {:#subdebate-94-285} #### Storage and Transport Services The operation of the Department of Administrative Services vehicle fleet, removal and storage costs associated with the transfer of civilian employees and the provision of bulk storage facilities for civilian departments are provided for in this item. The estimate for 1979-80 includes $14.3 million for vehicle purchases (mainly replacement vehicles). This is an increase of $5.3 million on the previous year and is largely offset by an increase of $4.8 million in the proceeds from sales of vehicles and depreciation provisions. Net Superannuation Payments nec This item covers the cost of superannuation benefits payable under the *Superannuation Act* 1922 and the *Superannuation Act* 1976 to or in respect of former employees of the Commonwealth (excluding defence personnel and employees covered by arrangements with the Australian Postal and Telecommunications Commissions). In addition, it reflects the cost of benefits paid under the South Australian and Tasmanian superannuation schemes to or in respect of former employees of the South Australian and Tasmanian Railways: this liability was assumed by the Commonwealth under the arrangements for the takeover of the railways in those States in 1974-75 The figures shown are net of the estimated offsetting receipts from Commonwealth authorities as contributions towards the accruing employer superannuation liability for existing employees or as reimbursement of the employer share of benefits paid to former employees or their dependants. The increase in net superannuation payments of $32 million reflects the estimated cost of new benefit grants to be made during the year and the cost of pension increases that were payable from July 1979. Also included is an increase of $1.8 million in payments for former railway workers in South Australia and Tasmania. Recoveries nec This heading records various miscellaneous receipts, including administrative charges for work undertaken by the Department of Housing and Construction, rent from Commonwealth property, charges for the hire of computers, audit fees and other minor charges. The increase of $4.9 million is mainly attributable to new accounting procedures to be introduced in 1979-80 for the inclusion of calculated overheads relating to day labour projects undertaken by the Department of Housing and Construction ($10.6 million). This is partly offset by certain reductions in revenues occasioned by the transfer of responsibility to the Northern Territory ($3.4 million). There is also an estimated reduction of $1.0 million in computer hire charges for the Australian Bureau of Statistics, mainly as a result of the purchase of new computer facilities by the Department of Finance. {: type="1" start="1"} 0. NOT ALLOCATED TO FUNCTION Outlays not allocated to specific functions comprise payments to the States, the Northern Territory and local government authorities not elsewhere classified, natural disaster relief, public debt interest payments, and a bulk allowance for prospective increases in wages and salaries of Commonwealth Government employees, other than Defence Service Personnel and employees paid from votes included in the Defence function. {: type="A" start="A"} 0. PAYMENTS TO OR FOR THE STATES, THE NORTHERN TERRITORY AND LOCAL GOVERNMENT AUTHORITIES, NEC Outlays under this heading comprise general revenue funds for the States, State Government Loan Council programs, assistance related to State debt, assistance for local government and outlays for natural disaster relief. Similar forms of assistance in respect of the Northern Territory are also included since 1977-78 when the transfer of financial responsibilities to the NT Government commenced. {:#subdebate-94-286} #### States' General Revenue Funds General revenue funds are available for purposes determined by the States. Financial assistance grants, which constituted most of these funds up to and including 1975-76, were determined under a formula which took into account increases in States' populations and in average wages in the economy as a whole, and a further 'betterment' factor. These arrangements were replaced by personal income tax sharing arrangements between the Commonwealth and State Governments in 1976-77. Under 'Stage 1' of the tax sharing arrangements, the States became entitled to receive: in 1976-77, 33.6 per cent of Commonwealth net personal income tax collections (excluding the revenue effects of any special surcharges or rebates applied by the Commonwealth) in that year; in 1977-78, a fixed amount of $4336. 1 million; and, in each subsequent year, 39.87 per cent of collections in the preceding year. (There were over-payments of$19.6 million in 1976-77 which were deducted from payments in 1977-78.) The 'Stage 1' arrangements include a 'guarantee' provision to ensure that the States' entitlements in any year will not be less than in the previous year in absolute terms and, in the four years 1976-77 to 1979-80, a supplementary undertaking ensures that the entitle- ments in those years will not be less than the amount which would have been yielded by the earlier financial assistance grants formula. Under 'Stage 2' each State will be able to legislate, in respect of residents in the State, to impose a surcharge, or to give a rebate, on personal income tax payable under Commonwealth law. Each of the four less populous States is entitled to apply for *special grants* which are paid on the recommendation of the Commonwealth Grants Commission. In recent years Queensland has been the only claimant State. The *repayments* shown under this heading are in respect of special repayable interest bearing advances which were made to New South Wales in 1971-72 and 1972-73 in the context of arrangements to assist the States to cope with their prospective budget deficits at that time. In total, net general revenue funds to be provided to the States in 1979-80 are estimated at $5429.5 million, an increase of $639.1 million, or 13.3 per cent, compared with 1978-79. {:#subdebate-94-287} #### State Government Loan Council Programs State Government Loan Council borrowing programs are underwritten by the Commonwealth and go through the Commonwealth Budget. At its June 1979 meeting the Loan Council approved a total State Government program of $1245.0 million for 1979-80, a reduction of $188.8 million or 13.2 per cent. Two thirds of this program ($830 million) will comprise advances and one third ($415 million) will be by way of interest free capital grants. At its meeting the Loan Council also approved a State semi-government borrowing program (which is not reflected in the Budget) of $1702.3 million for 1979-80 - $257 million or 17.8 per cent greater than in 1978-79. This includes an amount of $1225 million for the States' larger authorities basic program, special non-infrastructure additions of $76.6 million and $400.7 million for the semigovernment infrastructure financing program. Taken together, borrowings approved by the Loan Council for works programs of the States and their larger authorities are estimated to increase by $68 million (2.4 per cent) in 1979-80 to $2947.3 million. {:#subdebate-94-288} #### Assistance Related to State Debt Under the Financial Agreement the Commonwealth is to pay $15.17 million to the States each year until 1985 as a contribution towards interest payable on their debt. The Commonwealth makes sinking fund contributions in respect of State debt; these payments are estimated at $38.1 million in 1979-80. {:#subdebate-94-289} #### Assistance for Local Government Under the tax sharing arrangements introduced in 1976-77 the Commonwealth provides funds to the States for general purpose assistance to local government authorities. The assistance is provided as a proportion of Commonwealth net personal income tax collections in the preceding year. The proportion applying since 1976-77 has been 1.52 per cent. In 1979-80, however, the proportion is to be increased to 1.75 per cent. This is in line with the undertaking given by the Prime Minister in November 1977 to increase the proportion to 2 per cent by 1980-81. Largely as a result of the increase in the proportion, these grants are estimated to increase by $42.3 million (23.6 per cent) in 1979-80. Payments to the Northern Territory The Northern Territory became a self-governing Territory under the *Northern Territory (Self-Government) Act* 1978 on 1 July 1978. Under the Act, the Assembly of the Northern Territory has power, with the assent of the Administrator or Governor-General, to make laws for the peace, order and good government of the Territory, and Ministers of the Territory have executive authority in respect of specified functions of a State-type nature. An outline of the financial arrangements to apply to the Northern Territory is provided in Chapter V of Budget Paper No. 7, *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80.* In 1978-79, which was a transitional year in terms of financial arrangements, the bulk of Commonwealth funds for the Territory was provided as general purpose funds in the form of a global allocation of $280 million. From 1979-80 Commonwealth assistance to the Northern Territory will be based on the State model and the Territory will receive both specific purpose and general purpose funds. The main payments to be made to the Territory in 1979-80 which are not included under other functional headings are as follows: *General Revenue Assistance:* The bulk of general purpose assistance will be provided as a tax sharing entitlement under arrangements similar to those applying in respect of the States. The Northern Territory's tax sharing entitlement of $207.0 million has been derived as a residual after deducting estimates for specific purpose payments from an agreed total for recurrent expenditure in 1979-80. *Additional Assistance:* In the first six years of operation of the State type model the Northern Territory will receive either a special grant on the recommendation of the Commonwealth Grants Commission or an additional assistance grant, whichever is the greater. The additional assistance grant will be constant at $20 million for the three years commencing 1979-80 and will then phase out over the following 3 years. (The Grants Commission recommended a Special Grant of $10.0 million in 1979-80). *Capital Assistance:* The Commonwealth has undertaken tq provide general purpose capital funds to the Northern Territory on the same terms and conditions as apply to the State Loan Council Programs. In line with this undertaking one third of these funds will be provided as grants and the remaining two thirds as loans from the Commonwealth at rates of interest and on similar terms to those applying to the States under the Financial Agreement. The total of SI 06.9 million for general purpose capital funds in 1979-80 has been determined by subtracting the estimates of specific purpose capital payments from an agreed overall amount of capital assistance. *Debt Charges Assistance:* The general purpose capital funds to be provided to the Northern Territory will be on terms and conditions analogous to the State Government Loan Council programs and, accordingly, the Territory will incur interest costs and debt servicing obligations. The budget provision of $3.4 million is equal to the debt charges estimated to be incurred by the Territory in 1979-80 on the capital funds analogous to the State Government Loan Council programs. *Assistance for Local Government: A* specific payment of $1.1 million will be provided to the Northern Territory for distribution as general purpose assistance among local government authorities in the Territory in 1979-80. The entitlement is based on the per capita equivalent for population under local government of the payment to the States for this purpose in 1979-80. {:#subdebate-94-290} #### Natural Disaster Relief An amount of $5.5 million is provided for natural disaster relief payments to the States in 1979-80. This provision is to meet outstanding commitments to Queensland in respect of past disasters, mostly floods, storms and cyclones. No provision is made in the estimates for payments in respect of natural disasters which may occur in 1979-80. Until last year the Commonwealth met all expenditures by a State in a year on agreed relief measures necessitated by major disasters in excess of a base amount established in 1971 for that State. Under the new arrangements introduced in 1978-79, the States' base contributions were doubled and provision was made for expenditure in excess of those base amounts to be financed on a $3 Commonwealth: $1 State basis. Summary of Commonwealth Payments to the States, the Northern Territory and Local Government Authorities The payments described above are largely of a 'general purpose' - as distinct from 'specific purpose' - nature. Detailed information on both categories of payments is provided in Budget Paper No. 7, *Payments to or for the States, the Northern Territory and Local Government Authorities, 1979-80.* Estimated *total* Commonwealth payments to the States and the Northern Territory in 1979-80 are summarised below: {: type="A" start="B"} 0. PUBLIC DEBT INTEREST This heading brings together interest payments made from the Budget sector to other sectors. Interest received by Government Trust Funds on Commonwealth securities held as investments and cash balances is offset against gross interest payments. Total public debt interest payments are estimated to increase by 10.6 per cent to $2179.6 million in 1979-80; this is equivalent to 6.9 per cent of total estimated Budget outlays. *Gross Interest Paid on Commonwealth Securities* Interest on all Commonwealth securities on issue, except for defence borrowings, is included under this heading. The total includes interest on Commonwealth Bonds and Inscribed Stock, Australian Savings Bonds, and Treasury Notes. Reimbursements of interest from the States and Commonwealth Authorities on securities issued on their behalf are recorded as receipts under the receipts heading Interest, Rent and Dividends (see the relevant section in Budget Statement No. 4 for further details). The increase in interest payments in 1979-80 reflects the cost of financing the large deficits of recent years and the higher average rate of interest payable on securities on issue. The Government has announced its intention to introduce 'tap' and tender systems for marketing Treasury Bonds and Treasury Notes respectively. These new systems are planned to be fully operational during 1979-80. {:#subdebate-94-291} #### Other Interest Payments Included here are interest payments by the Commonwealth on trustee moneys lodged with it at call, interest on credit arrangements in the United States for defence equipment purchases, and interest payments on borrowings from private lenders by the ACT Commissioner for Housing. {:#subdebate-94-292} #### Loan Consolidation and Investment Reserve Interest is received by the Loan Consolidation and Investment Reserve on investments in Commonwealth securities which are issued mainly in Special Loans to assist with the financing of State Loan Council programs. These amounts, which represent the receipt of interest by the Commonwealth (through one of its Trust Accounts) from the Commonwealth itself, are offset against gross interest payments. {:#subdebate-94-293} #### Other Interest is received also on investments in Commonwealth securities and on cash balances held by other Commonwealth Trust Funds, including the National Debt Sinking Fund. These amounts too are offset in arriving at net interest payments. {: type="A" start="C"} 0. ALLOWANCE FOR WAGE AND SALARY INCREASES (NON-DEFENCE) A bulk allowance of S35 million is included in the 1979-80 Budget estimates to allow for prospective increases during 1979-80 in wage and salary rates in the public service, other than for employees and service personnel paid from votes included under the Defence function. (A separate allowance of $30 million is included in the Defence function for the latter category). These allowances for prospective wages increases are not appropriated as such at this stage; the amounts required in the light of actual pay, wage and salary increases will be reflected in additional appropriations later in the year. {: .page-start } page 248 {:#debate-95} ### STATEMENT No. 4- ESTIMATES OF RECEIPTS 1979-80 {: .page-start } page 249 {:#debate-96} ### STATEMENT No. 4 - ESTIMATES OF RECEIPTS 1979-80 Total receipts in 1979-80 are estimated at S29 499 million, an increase of 15.4 per cent over receipts in 1978-79. In the absence of the tax measures identified in the following table, estimated receipts in 1979-80 would have grown by 9.0 per cent to S27 871 million. These figures incorporate the effects upon the revenue of the steps taken to date to counter tax avoidance; these are not shown in the table hereunder. The impact of tax avoidance on revenue collections is indicated by the fact that, of the revenue shortfall of $490 million in 1978-79 (largely in the areas of provisional and company tax), $180 million was due to tax avoidance over and above the amount - $50 million - for which allowance was made when the 1978-79 Budget figures were prepared. Of this $230 million of revenue lost in 1978- 79 because of avoidance, $200 million was reflected in tax outstanding at 30 June 1979, the balance - $30 million - representing assessments that had not been able to be raised by 30 June 1979. More than that, the tax avoidance problem is a continuing one: the total amount of income tax outstanding at 30 June 1979 included an abnormally high figure of $433 million ($10 million more than the Treasurer reported in his statement of 1 August 1979, the increase being based on later estimates and data) attributable to specific tax avoidance schemes against which the Government has taken action. The figure of $433 million includes the $200 million already referred to and $75 million penalty tax thereon; the balance is made up of $158 million which had been assessed prior to 30 June 1978 and was outstanding at that date. The total of $433 million is thus, in effect, tax in dispute arising from those schemes and, given the nature of the processes involved, it is not assumed, for purposes of the revenue estimates, that any of this amount will be recovered in 1979-80. In addition, in preparing the 1979-80 estimates of revenue, it has been necessary to allow a sum of $250 million to cover possible loss of revenue through further tax avoidance. {: .page-start } page 249 {:#debate-97} ### TAXATION MEASURES The table below lists taxation measures announced both prior to and in the Budget and shows the estimated effects on receipts in 1979-80 and in a full year. Decisions having effects on revenue for 1979-80 were announced in the Treasurer's statement to the Parliament on 24 May 1979, in the Prime Minister's Energy Policy statement of 27 June 1979 and in the Minister for National Development's statement of 29 June 1979 on Crude Oil Prices and Rates of Crude Oil Levy. Minor revenue measures outside the taxation field that would affect receipts are not shown. Full year estimates are the ultimate changes in receipts that would have obtained if new rates or other arrangements had applied for the whole of 1979- 80 (i.e. from 1 July 1979) to the estimated level of the relevant tax base in that year. {:#subdebate-97-0} #### Personal Income Tax {:#subdebate-97-1} #### Indexation Suspension and Rate Change In accordance with the 24 May announcement there was no adjustment to PA YE deductions from 1 July 1979 for 1979-80 tax indexation or to remove the 1½ per cent temporary standard rate increase applying in 1978-79. Pre-July 1979 PA YE tax instalment deductions are to continue until 30 November 1979, incorporating the standard rate increase at the effective rate of 2.57 per cent; this had applied from 1 November 1978 in order that the amount which a1½ per cent increase would have raised through PA YE deductions in a full year would be collected between 1 November 1978 and 30 June 1979. From 1 December 1979, the standard rate will revert to 32 per cent for PAYE purposes. Tax indexation has been suspended for 1979-80 and, accordingly, there will be no indexation adjustment to either dependants' rebates or the income brackets to which rates are applied. Assessment of 1979-80 tax will be based on a weighted composite scale, derived as an average of the 34.57 per cent standard rate scale on which PAYE deductions to apply up to 30 November 1979 are effectively based, weighted as to 5/12, and the 32 per cent standard rate scale which will effectively apply to PAYE deductions thereafter, weighted as to 7/12. The composite rate scale for assessment of 1979-80 income tax is: Provisional tax arrangements seek to achieve reasonable consistency between the treatment of PAYE and provisional taxpayers. Since 1976, the provisional tax payment of taxpayers who do not self-assess but have their payment based on their income in the preceding year, has been calculated at higher than current year's rates. That has been done as a means of achieving a degree of consistency with cases of taxpayers who self-assess, providing an estimate of the current year's income, and have current year's rates applied to that income. Depending on the nature of the assessment scales in successive years, the higher rates applied where there was no self-assessment have been either the preceding year's scale or a scale determined in some other way. In 1979-80, when the rates to be applied on assessment will be lower than the 1978-79 rates, the following arrangements are to apply: o For provisional taxpayers who self-assess, the provisional payment will be derived by applying the composite rate scale for 1979-80. o For provisional taxpayers who do not self-assess, the composite rate scale for 1979-80 plus a loading of 3 percentage points will be applied to that part of 1978-79 taxable incomes above $3893. On conservative assumptions about the average rise in provisional incomes, the provisional payment on this basis will more closely approach (but still be less than) that payable by those who self-assess (and the increased PAYE payments by salary and wage-earners as a result of increases in their incomes). For those who do not self-assess and who claim a deduction for the trading stock valuation adjustment in respect of their 1978-79 income, there will be a further modification now that TSVA has been withdrawn. Their provisional tax for 1979-80 will be adjusted to eliminate any effect which the TSVA deduction had in respect of the 1978-79 income year. The rebate for concessional expenditure in excess of $1590 will be at the rate of 33.07 per cent in 1979-80. The maximum rate of tax on fully-assessable lump sum retirement payments for unused annual leave and unused long service leave for 1979-80 will also be 33.07 per cent. {:#subdebate-97-2} #### Business Income {:#subdebate-97-3} #### Retention Allowances of Private Companies Under Division 7 of the Income Tax Assessment Act, a private company becomes liable to additional tax if it does not distribute a prescribed proportion of after-tax taxable income. The purpose of the provision is to maintain, as far as practicable, equity of treatment between shareholders in private companies and persons who operate unincorporated businesses as sole traders or partnerships. Without such a provision, extensive tax minimisation, by retention of profits in the private company's hands, would be expected where the rate of company tax (currently 46 per cent) is well below the maximum marginal rate of tax on individuals (61.07 per cent for 1979-80). The retention allowance in respect of trading profits is to be increased from 60 to 70 per cent thus placing more funds at the direct disposal of private companies for purposes of expansion and development. The allowance in respect of property income will remain at 10 per cent. {:#subdebate-97-4} #### Trading Stock Valuation Adjustment Termination of the trading stock valuation adjustment concession, to apply with effect from the commencement of the 1979-80 income year, was announced on 24 May 1979. The estimated full year revenue gain is $366 million. A $30 million gain is estimated for 1979-80 in respect of provisional taxpayers, but most of the revenue gains will first occur in 1980-81. *Depreciation of Income-producing Buildings - Traveller Accommodation* Depreciation on certain new income-producing buildings used for the accommodation of travellers will be allowable as a tax deduction at a flat rate of *2i* per cent per annum on the original amount of eligible expenditure. Buildings which consist of at least 10 guest rooms, and the construction of which commences after 21 August 1979, will qualify for the deduction. Also eligible for the deduction will be extensions of at least 10 guest rooms to existing buildings used for the accommodation of travellers where construction of the extension commences after 21 August 1979. Where the building is a multi-purpose building, the depreciation allowance will be limited to those parts of the building that are related to the accommodation of travellers. The general rule will be that the depreciation deductions will be based on the original eligible cost of a building, and *2i* per cent of that cost will be the annual deduction commencing with the year in which the building is first used to provide traveller accommodation. When the building changes hands, the buyer will take over the residual entitlement to deductions of the same annual amounts as earlier owners (2± per cent of the original construction cost) for the unexpired part of the 40 year period. The annual deduction will be pro-rated in a year in which an eligible building commences to be used to provide traveller accommodation. {:#subdebate-97-5} #### Storage Facilities for Grain, Hay or Fodder Since 1973, on-farm facilities for the storage of grain, hay or fodder have been subject to depreciation in the usual way at rates appropriate to the nature of the structures concerned. The investment allowance has also been available in respect of such facilities. A new special rate of depreciation - 20 per cent - will apply to such on-farm facilities for the storage of grain, hay or fodder, which are ordered, or the construction of which by the farmer commences, after 21 August 1979. Such facilities will continue to be eligible for the investment allowance. {:#subdebate-97-6} #### Limitation of Value of Motor Cars for Depreciation and Leasing Purposes For motor cars and station wagons (including four wheel drive vehicles and those used to provide services to the general public) acquired under orders placed after 21 August 1979, a cost limit of $18 000 will apply for income tax depreciation purposes. The limit will apply both to vehicles used by their owner and to vehicles owned by leasing companies. Balancing adjustments under the depreciation provisions will also be calculated by reference to this deemed maximum cost of $18 000. The limit of $18 000 will be indexed annually by the change in the average level of the motor vehicle purchase component of the Consumer Price Index for the year ended in the March quarter of the preceding year. Thus, the depreciation limit on cars and station wagons that are purchased in the 1980-81 income year will be $1 8 000 varied by the percentage change in this component of the CPI between the year ending March 1979 and the year ending March 1980. Where cars or station wagons (including four wheel drive vehicles) that had been leased are bought by lessees (or a relative or other associate) at a price that enables them to be resold at a profit, this profit may not be subject to tax under present law. To overcome this, the law will be amended to provide that where a person purchases after 21 August 1979 and then, at an otherwise nontaxable profit, sells a vehicle that had been leased to him (or to a relative or other associate of that person), he will be treated, for the purposes of depreciation balancing charge provisions, as having been allowed prime cost depreciation up to the amount of deductible leasing charges throughout the term of the lease. In this way, any profit arising on the sale or disposal will be subject to tax on a basis corresponding with that applied where a person sells plant on which he has previously been allowed depreciation. The amount of assumed depreciation will be calculated under the prime cost method using the normal rate of depreciation with an adjustment being made where the vehicle is sold by the lessor for a price that differs from the resulting assumed written-down value. {:#subdebate-97-7} #### Income Equalisation Deposits In respect of the 1978-79 income year and subsequent years, the maximum income tax deduction in any year for subscriptions to IEDs is increased from 40 to 60 per cent of gross receipts from primary production and the limit on total deductions in respect of IED and Drought Bond holdings at any one time is increased from $100 000 to $250 000. {:#subdebate-97-8} #### Customs Duty {:#subdebate-97-9} #### Revenue Customs Duty It was announced on 24 May 1979 that an ad valorem revenue customs duty of 2 per cent would apply from 1 July 1979 to many goods previously imported free of duty, whether entered under by-law or at zero substantive rate. Important classes of imports that remain duty-free include crude and enriched oil, motor vehicle components imported duty-free under the Motor Vehicle Manufacturing Plan, books and a wide range of other goods where imposition of the duty would conflict with international trade commitments and understandings. {:#subdebate-97-10} #### Coal Export Duty The existing coal export duty of $3.50 per tonne on high quality coking coal is to be reduced, from 1 November 1979, to $1.00 per tonne for coal obtained by underground mining and for coal mined from major expansions of existing opencut operations or from new open-cut projects where production from the major expansion or the new project commences after 30 June 1980. The existing duty of $3.50 per tonne on high quality coking coal will remain unaltered for open-cut mines in production by 30 June 1980. Similarly, no change is proposed to be made to the existing duty of $1.00 per tonne on exports of other quality coking coal. {:#subdebate-97-11} #### Crude Oil Levy On 29 June 1979 the Minister for National Development, in announcing new import parity prices for Australian produced crude oil, also announced changes in the way in which the rates of levy applying to parity-related oil were to be determined. These changes had been foreshadowed in the Treasurer's 24 May statement. The new arrangements in respect of levy rates on parity-related oil, which apply from 1 July 1979, distinguish between fields as follows: - o For fields with an annual production of less than 2 million barrels, the levy remains at $3 per barrel, i.e. producers receive the benefit of all future increases in the import-parity price. (n) {: type="a" start="a"} 0. Crude oil levy rates are formally set in S per kilolitre; S3 per barrel is the approximate equivalent of SI 8. 90 per kilolitre. o For fields with an annual production of at least 2 million but less than 15 million barrels, the levy is$3 per barrel *plus* 75 per cent of increases after 30 June 1979 in the import-parity price. Consequently, the return to producers now is their return from 1 January 1979 *plus* 25 per cent of increases after 30 June 1979 in import-parity prices. o For fields with an annual production of 15 million barrels or more, at present only certain Bass Strait fields, the levy is$3 per barrel *plus* the increases on 1 January and 1 July 1979 in the import-parity price. This leaves the returns per barrel to the producer at the level applying from 1 July to 31 December 1978. From 1 January 1980, that return ($9.59 per barrel) will be indexed according to increases in the Consumer Price Index after the December quarter of 1978 or increases in import-parity prices after 1 July 1979, whichever is the lesser. A detailed description of pricing and levy arrangements applying from 1 July 1979, together with a resume of earlier developments in both the oil pricing and oil levy arrangements, is contained in the Appendix to this Statement. {:#subdebate-97-12} #### Sales Tax {:#subdebate-97-13} #### Sales Tax Concessions for Blind or Deaf Persons A wide range of appliances and other goods used by blind or deaf persons is already exempt from sales tax. There is now to be a general exempting provision, effective after 21 August 1979, that applies to articles designed and manufactured expressly for and of a kind used by blind or deaf persons. *Sales Tax on Piano Rolls and Antiques* Piano rolls, currently taxed at 15 per cent, and antiques, currently taxed at various rates, will be exempt after 21 August 1979. {:#subdebate-97-14} #### Energy Conservation Incentives Measures to conserve oil resources announced in the Prime Minister's 27 June 1979 statement on Energy Policy and in the Budget are as follows: {:#subdebate-97-15} #### Income Tax - Conversions As announced in the Budget Speech, capital costs of conversion of units of oil-fired industrial equipment so as to enable use of other energy sources will attract special income tax concessions. The concessions are to apply where the equipment concerned is wholly and exclusively used in Australia and in the production of assessable income. The new concessions, which take two forms, will have effect in respect of conversions or replacements effected after 21 August 1979 of oil-fired plant in use or contracted for at that date where the conversion items are ordered after 21 August 1979 and are in use by 30 June 1982. One concession is a conversion allowance at a rate of 40 per cent of the cost of a unit of plant installed as a necessary part of the process of conversion. This conversion allowance will be allowed in the year in which the replacement plant is first used, or installed ready for use and held in reserve. The 40 per cent allowance will take the place of any 20 per cent investment allowance that might otherwise have applied but the unit will continue to be subject to normal depreciation deductions. The second concession concerns a unit of plant that is converted or adapted as distinct from being replaced. In this case, the full costs of conversion or adaptation will be allowed as a deduction from assessable income in the year in which those costs are incurred. {:#subdebate-97-16} #### Income Tax - Rebate for Petroleum Exploration and Development Under present law, a company engaged in offshore petroleum exploration and development activities may elect to forgo its right to income tax deductions for capital expenditures on those activities in order to give its corporate and noncorporate shareholders a tax rebate of 30 per cent for share capital subscribed that is spent on eligible outgoings. This scheme is to be extended, subject to safeguards to be announced, to include onshore petroleum exploration and development. In addition, the period within which capital subscribed must be spent in order to qualify for a rebate will be increased from 2 to 4 years following the year of receipt. These changes will apply to share capital subscriptions after 21 August 1979. {:#subdebate-97-17} #### Excise Duty Liquefied petroleum gas (LPG) used as an automotive fuel was subject to tax at a rate of 2.125 cents per litre which, in energy-equivalent terms, was rather lower than the rate of excise duty on petrol. The tax on LPG used as an automotive fuel was withdrawn with effect from 28 June 1979. {:#subdebate-97-18} #### Sales Tax Kits for converting motor vehicles to liquefied petroleum gas, previously subject to sales tax at the general rate of 15 per cent, were exempted from sales tax with effect from 28 June 1979. As announced in the Budget Speech, a similar exemption will apply to kits for converting vehicles to compressed natural gas use. Kits for converting other internal combustion engines to liquefied petroleum gas or compressed natural gas will also be exempt. Domestic room heaters (other than kerosene heaters) that were previously subject to sales tax at *2i* per cent were exempted from sales tax with effect from 28 June 1979. Kerosene heaters remain subject to tax at 2± per cent. Solar water heaters and (with some minor exceptions) other devices based on solar energy, previously subject to sales tax at 15 per cent, were exempted from tax with effect from 28 June 1979. Where the solar device is incorporated in a heating or power installation the other parts of which are interchangeable with those of other energy source installations, the solar device alone will be exempted, the other parts continuing to be treated for sales tax as at present. Where, however, a solar-powered installation is supplied as a single integrated appliance, the complete unit will be exempt. {: .page-start } page 257 {:#debate-98} ### RECEIPTS ESTIMATES The following table compares estimated receipts in 1979-80 with actual receipts in each of the two preceding years. {:#subdebate-98-0} #### Taxation Revenue After taking account of the measures described above, total taxation revenue in 1979-80 is estimated to increase by 16.4 per cent to $27 119 million. The main components are described below. {:#subdebate-98-1} #### Customs Duty - Imports Collections of customs duty on imports are estimated to total $1570 million in 1979-80, an increase of $207 million or 15.2 per cent, compared with an increase of 20.5 per cent in 1978-79. The smaller increase in 1979-80 reflects estimated slower growth in the underlying import base. (Prospects for imports are discussed in Statement No. 2.) The effect of slower import growth on .collections is offset in part by the introduction from 1 July 1979 of the 2 per cent ad valorem revenue customs duty which is estimated to yield $80 million in 1979-80. It is assumed that the ratio of duty to the relevant import base, adjusted for the effect of the 2 per cent revenue duty, will remain the same as in 1978-79. {:#subdebate-98-2} #### Customs Duty - Coal Exports Collections from the coal export levy are expected to total $94 million in 1979-80, an increase of only $0.5 million over 1978-79 collections. It is estimated that in the absence of the Budget measures described earlier in this Statement, receipts would have risen by more than 13 per cent to $106 million because of expected increases in the volume of exports. {:#subdebate-98-3} #### Excise Duty Total collections of excise duty are estimated at $4771 million in 1979-80, an increase of $926 million or 24 per cent over 1978-79. The main components of the 1979-80 estimates, and comparable figures for 1978-79, are as follows: {: type="a" start="a"} 0. *Crude Oil and LPG Duties* It is estimated that receipts from the levy on crude oil will increase by 70 per cent from $1189 million in 1978-79 to $2023 million in 1979-80; such revenue would thus represent 7.5 per cent of total taxation revenue in 1979-80 compared with 5.1 per cent in 1978-79. The increase in crude oil levy receipts accounts for about 3.3 percentage points of the estimated increase in total receipts in 1979-80 of 15.4 per cent. The import-parity price of $18.66 per barrel for oil from Bass Strait which has applied since 1 July 1979 is assumed to prevail throughout 1979-80. Underlying the estimates are an assumed moderate increase in production and the announced further increase in the proportion of oil for which producers receive import-parity related prices. Under the arrangements introduced in the 1977-78 Budget the entitlement to receive import-parity related prices in 1979-80 rises from 20 to 35 per cent of production or 6 million barrels per year from each field or new development within a field, whichever is the greater. The estimate also reflects the new crude oil levy arrangements announced on 29 June 1979, which are described briefly earlier in this Statement. A detailed description of pricing and levy arrangements to apply from 1 July 1979, together with a resume of earlier developments in both the oil pricing and oil levy arrangements is contained in the Appendix to this Statement. Estimated contributions of the various factors accounting for the increase of $834 million in estimated receipts from the crude oil levy in 1979-80 are set out in the table below. The calculations are based on the estimated levels of production of fields in 1979-80 and the application of the relevant changes in applicable levy rates, with the exception of the full year effect of the 1978-79 Budget measure which is calculated on the basis of 1978-79 production levels. The effects on receipts of changes in the pattern of production (which are embodied in the various estimates) are largely offsetting, apart from the phased move to 35 per cent in the share of parity-related oil (which is shown explicitly). It is evident that the very large estimated increase in revenue from this source mainly reflects the substantial price increase from 1 July 1979 and the change in levy arrangements. The scheduled increase to 50 per cent in the producers' entitlement to parity-related prices in 1980-81 suggests considerably more modest growth - or even a decline - in revenue from this source in that year. {: type="a" start="b"} 0. *Other Duties* For beer, potable spirits and tobacco products, it has been assumed that clearances will increase from the *post-Budget levels* in 1978-79 at rates broadly similar to those in other recent years in which there has been no change in excise rates. However, because clearances were high *before* the 1978-79 Budget was brought down, clearances for 1979-80 are expected to be lower than clearances for 1978-79 as a whole. The increases in receipts shown in the table reflect the full year effects of the increases in duties announced in the 1978-79 Budget. For petroleum products allowance has been made for the effects on consumption of the further sharp increase in the final price of such products. Rates of duty for the main items subject to excise are shown in the following table. {:#subdebate-98-4} #### Sales Tax Revenue from sales tax in 1979-80 is estimated at $1900 million, an increase of 7.4 per cent, compared with growth of less than 1 per cent in 1978-79. Sales tax revenue depends on the tax rate and the value of taxable sales. The slow growth in 1978-79 reflected mainly the transfer of motor cars and station wagons from the 27½ per cent rate class to the 15 per cent rate class with effect from 16 August 1978. If 1978-79 receipts were estimated on the basis that this measure had applied for the full year, the implied growth of receipts in 1979-80 would be a little over 10 per cent. This represents an estimate of the underlying increase in the value of taxable sales in 1979-80 allowing for increases in wholesale prices and for modest growth in the volume of taxable sales. Estimated collections by rate class for 1979-80 and the previous year are set out in the following table: {:#subdebate-98-5} #### Income Tax - Individuals It is estimated that net collections of income tax from individuals in 1979-80 will increase by 18.2 per cent to $15 128 million. This estimated total comprises, on the one hand, components which will relate mainly to taxable incomes in 1978-79 - PAYE refunds and collections from other individuals - and, on the other hand, gross PAYE collections which will relate to taxable incomes during 1979-80. Gross PAYE receipts are estimated to increase by 15.0 per cent to $13 150 million in 1979-80. This compares with increases of 8.1 per cent in 1978-79 and 7.8 per cent in 1977-78. Underlying the estimate of gross PAYE receipts for 1979-80 are assumed increases of 9 to9½ per cent in average weekly earnings and 1 per cent in employment. Average weekly earnings (male unit basis) are estimated to have increased by 7¾ per cent in 1978-79 and wage and salary earner employment by¾ per cent. The estimate of gross PAYE receipts reflects the interim arrangements for PAYE instalment deductions announced on 24 May 1979 as well as the measures announced in the Budget. All these are described earlier in this Statement. It is estimated that, in the absence of these various measures - that is, on the basis of policy prior to 24 May 1979 - gross PAYE receipts would have increased by less than 8 per cent in 1979-80. Refunds in 1979-80, which are in respect of tax assessed on 1978-79 incomes, are estimated to increase by 15.4 per cent to $1200 million. Refunds in 1979-80 will be boosted by about $70 million because of excess deductions under the PAYE instalment arrangements giving effect to the1½ percentage point increase in the standard rate announced in the 1978-79 Budget. (See 1978-79 Budget Paper No. 1, p. 158.) {: type="a" start="c"} 0. *Other Individuals* Receipts from other individuals are estimated to increase by 32.1 per cent to $3178 million in 1979-80. Tax payments by other individuals depend mainly on taxable income in the previous year and the estimated increase reflects the very substantial increase in primary producer incomes in 1978-79 in conjunction with moderate estimated increases in property and other business incomes. Provisional tax is at present charged to salary and wage earners, pensioners and superannuitants only when their other income is $400 per annum or more. In 1979-80 that threshold will be increased to $1000 per annum at a cost to the revenue of $16 million in 1979-80. Estimated costs to revenue of the investment allowance and the trading stock valuation adjustment in respect both of companies and of individuals are set out in the table below. {:#subdebate-98-6} #### Income Tax - Companies Company tax collections are estimated to increase from $3037 million to $3280 million, or by 8.0 per cent, in 1979-80. This estimate compares with a decline of 1.9 per cent in 1978-79. Tax receipts from companies are in respect of income of the previous year; the expected increase mainly reflects stronger growth in 1978-79 than in 1977-78 in company income subject to tax. The estimated costs to revenue of the investment allowance and the trading stock valuation adjustment in respect both of companies and of individuals are set out in the following table: {: type="a" start="a"} 0. Revised. {:#subdebate-98-7} #### Withholding Tax Dividend and interest withholding tax collections in 1979-80 are estimated at $120 million, an increase of $6 million, or 5.2 per cent, on 1978-79 collections. {:#subdebate-98-8} #### Payroll Tax Payroll tax receipts are estimated at $17 million in 1979-80, $1 million more than in 1978-79. {:#subdebate-98-9} #### Departure Tax Receipts from the departure tax are estimated at $18 million in 1979-80. The increase of 50 per cent on collections in 1978-79 mainly reflects the fact that the tax, which came into effect on 24 October 1978, applied only for part of 1978-79. {:#subdebate-98-10} #### Estate Duty Total collections in 1979-80 are estimated at $40 million, a fall of $42 million from the 1978-79 level. This reflects the phased abolition of estate duty, with partial effect from 21 November 1977 and complete abolition from 1 July 1979. {:#subdebate-98-11} #### Gift Duty Gift duty receipts are estimated to total $1.3 million, compared with $1.4 million in 1978-79. Gift duty has been phased out in parallel with estate duty, with complete abolition from 1 July 1979. {:#subdebate-98-12} #### Stamp Duty Receipts from stamp duties and like taxes in the Australian Capital Territory are estimated at $6 million, about the same as in 1978-79. {:#subdebate-98-13} #### Other Taxes, Fees and Fines Estimates for the major items of other taxes, fees and fines are shown in the following table: The large increase in revenues from *broadcasting and television station licence fees* in 1979-80 reflects mainly proposed increases in licence fees by an overall 50 per cent. These increases are to apply from 1 October 1979 and are estimated to yield $6.5 million additional revenue in 1979-80. The remainder of the increase is attributable to the higher gross earnings of stations in 1978-79, on which fees in 1979-80 are based. Revenues from *radio-communication licence fees* are estimated to increase by $6. 1 million, $6 million of which reflects increases in certain fees of up to $25 which became operative on 1 July 1979. Fees for 'Citizen Band' radio, amateur radio and essential community service categories were not increased. *Unfunded employees retirement contributions* are estimated to increase marginally in 1979-80. This item records contributions paid during the year by Parliamentarians and Service personnel to their superannuation schemes. Also included are net amounts retained by the Commonwealth in respect of retiring Commonwealth employees opting for a contributor financed pension in lieu of a refund of their accumulated contributions to the Superannuation Fund. A small increase is forecast in *stevedoring industry collections,* which involve levies on employers of waterside workers. A matching outlay is made to the Stevedoring Industry Finance Committee which is responsible for funding certain payments in respect of waterside workers, mainly for retirement benefits. Miscellaneous *taxes and charges in the Australian Capital Territory* are estimated to increase by $2.2 million in 1979-80. The main revenue items included here are general rates ($16.2 million), motor registration and drivers' licence fees ($8.4 million) and liquor licence fees ($2.0 million). As part of the Government's energy policy the Prime Minister announced on 27 June that the *tax on liquefied petroleum gas used in road vehicles* would be abolished with effect from that date. *Passport fees* were increased from $20 to $25 on 26 May 1979. Mainly because of that increase, revenues from these fees are estimated to increase by $2.5 million in 1979-80. The largest items in the *other* category are quarantine charges ($3.2 million) and bankruptcy charges ($1.8 million). This category also includes a small amount of Commonwealth revenue ($0.4 million) from miscellaneous taxes and charges in the Northern Territory, but most taxes and charges in the Northern Territory which were previously levied by the Commonwealth have been levied by the Northern Territory Government since 1 July 1978. {: .page-start } page 265 {:#debate-99} ### OTHER RECEIPTS {:#subdebate-99-0} #### Interest, Rent and Dividends Details of estimated receipts of interest, rent and dividends are set out below : All interest received by the Commonwealth Government from sources outside the Budget sector is included under this general heading, together with land rents collected in the A.C.T. and dividends received from Government-owned companies other than financial enterprises. Total receipts from *interest, rent and dividends* are estimated at §2047.5 million in 1979-80, an increase of $125.1 million or 6.5 per cent, largely as a consequence of growth in Commonwealth advances outstanding. Interest received from the States in respect of general works and housing programs is estimated to increase by $91.4 million. Interest on previous specific purpose advances is estimated to increase by $24.4 million, of which $10.3 million relates to advances for housing. Included in the 'other' specific purpose category for 1979-80 are initial interest receipts of $8.6 million in respect of advances made to Queensland for the Gladstone Power Station. Other interest receipts are estimated to decline by $6.9 million in 1979-80. The Australian Postal Commission and Qantas Airways Ltd have made substantial repayments of earlier advances in recent years and the Australian National Airlines Commission will make substantial repayments in 1979-80; as a consequence interest received from these authorities is expected to decrease in 1979-80. In recent years the Australian Telecommunications Commission and the Australian Shipping Commission have raised loans on their own behalf, instead of seeking advances from the Budget; this has operated to stabilise the level of interest receipts from those bodies. On the other hand, the refinancing of maturing advances to the Australian Telecommunications Commission at higher rates of interest has led to an increase of $2.5 million in the interest payable by the Commission in 1979-80. New financial arrangements for the Australian National Railways Commission were introduced in 1978-79: interest received in that year ($11.4 million) includes outstanding interest charges from 1 July 1975; the estimate for 1979-80 is $4.2 million. Rent and dividends, etc., are estimated to increase by $17.0 million or 31 per cent in 1979-80. Offshore petroleum royalties are estimated to increase by $12.8 million in 1979-80, reflecting an increase in the proportion of oil production attracting import-parity related prices. Reflecting favourable trading conditions, the Overseas Telecommunications Commission is to pay a dividend of $20 million to the Commonwealth in 1979-80, compared with $12.5 million in 1978-79. Provision is also made for the receipt of a dividend from the Australian National Airlines Commission (TAA) of $4.5 million in respect of its 1978-79 operations. This is double the dividend received in 1978-79 and reflects improved profitability. The increase in land rents in the A.C.T. reflects a projected increase in the number of new leases to be granted in 1979-80. The reduction of $1.2 million in revenue under the *Other* category reflects small reductions in estimated dividends from the Snowy Mountains Engineering Corporation and the Housing Loans Insurance Corporation, and in War Service Land Settlement rents. {:#subdebate-99-1} #### Net Receipts From Government Enterprise Transactions Estimates of these receipts, which include receipts (other than taxation revenue) from public financial enterprises and the net operating revenues of certain activities carried on as business-type enterprises, are shown in the following table: The receipt by the Commonwealth of $262.9 million in 1978-79 from the profits of the *Reserve Bank* comprised $92.9 million as the balance of the Commonwealth's share of 1977-78 profits (bringing the Commonwealth's total share of that year's profits to SI 82 .9 million) and an interim payment of $170 million from the Note Issue Department profits for 1978-79. The 1979-80 provision of S226.4 million comprises S41.4 million as the balance of the Commonwealth share of 1978-79 profits (bringing the total Commonwealth share from that year's profits to $211.4 million) and an interim payment of $185 million in respect of projected 1979-80 Note Issue Department profits. The *Commonwealth Banking Corporation* is to pay S35.7 million to the Commonwealth in 1979-80, representing one half of the 1978-79 net profits of the Commonwealth Trading Bank and the Commonwealth Savings Bank. The amounts included for *Northern Territory electricity, water supply and sewerage* in 1978-79 and 1979-80 are in respect of operations prior to the transfer of those enterprises to the Northern Territory Government with effect from 1 July 1978. The *Other* category comprehends the operations of various government canteens, the Government Printer and publications trust accounts and business undertakings operated by the Department of Housing and Construction. {:#subdebate-99-2} #### Sale of Existing Assets Receipts from the *disposition of the Commonwealth's uranium stockpile* are estimated at $37.5 million in 1979-80. The Commonwealth entered into agreements in 1977 to provide access to the Commonwealth's uranium stockpile by certain Australian companies to enable them to meet initial delivery obligations under approved contracts entered into prior to December 1972. The agreements provide for amounts approximating the net proceeds from the sale of uranium to be paid to the Commonwealth pending the return of uranium to the Commonwealth. A projected increase in the number of blocks to be sold in 1979-80 is the main factor in the forecast increase of $3.1 million in receipts from the *sale of leases in the Australian Capital Territory.* The *Other* category comprises receipts from the sale of sites and buildings by the Department of Administrative Services and - in 1977-78 - receipts from land sales in the Northern Territory. {: .page-start } page 269 {:#debate-100} ### APPENDIX TO STATEMENT No. 4 {: .page-start } page 269 {:#debate-101} ### CRUDE OIL PRICING AND LEVY ARRANGEMENTS On 29 June 1979 the Minister for National Development announced new excise levy rates for domestically produced oil. Those rates are related to the price paid by refineries for Australian-produced crude oil (the 'import parity' price) and to the price received by Australian oil producers. Pricing arrangements for locally-produced oil have undergone considerable change since the commencement of commercial crude oil production in Australia in 1964, as have the levy arrangements since their introduction in 1975. The summary below traces developments in both areas. The price of crude oil produced in Australia has been subject to Government control since production commenced from the Moonie field in 1964. Oil from both the Moonie and Barrow Island fields (the latter came on stream in 1967) was, until 18 September 1970, priced at above import parity levels because of the 'inclusion of a substantial incentive component to encourage exploration. Prices received by the Moonie and Barrow Island producers prior to September 1970 were$3. 14 per barrel and $3.24 per barrel respectively. The discovery of large oil reserves in Bass Strait in 1967, production from which commenced in 1969, resulted in major changes to the earlier pricing policy. On 10 October 1968 the then Prime Minister announced that, for the 10 years beginning on 18 September 1970, all Australian-produced oil was to be used by Australian refineries - the so-called 'absorption' policy. (Australian refineries had, since 1965, been required to purchase the output of the relatively small Moonie and Barrow Island fields.) In addition, he announced that Australian crude oil producers would, for the first half of that period (i.e., from 18 September 1970 to 17 September 1975), receive the import parity price prevailing on 10 October 1968. On the basis of this policy producers were to receive the prices shown below: The quadrupling of OPEC prices in 1973 and 1974 was not reflected in the prices received by producers; they remained unchanged until September 1975. An excise levy on Australian-produced crude oil was first introduced on 19 August 1975 when, in the Budget Speech for 1975-76, the then Treasurer announced the immediate imposition of a levy of$2.00 per barrel on the production of stabilised crude oil, and naturally occurring LPG. The levy was initially announced as a rate set in dollars per barrel and, while the *Excise Act* 1901 sets the rate in dollars per kilolitre, the dollars per barrel equivalent is, for the sake of continuity, used in this appendix. The levy was added to the price paid by refiners to producers; the outcome was thus as follows: On 14 September 1975, following a review of policy, the then Prime Minister announced the oil pricing policy to apply for the five years ending 17 September 1980. That policy introduced the distinction between 'new' and 'old' oil. For 'new' oil, defined as oil produced from fields discovered after 14 September 1975, the policy provided for producers to receive import parity prices, as set from time to time, less the $2.00 per barrel levy. The import parity price in September 1975 was about $8.90 per barrel for the equivalent of Bass Strait oil. (No Bass Strait oil attracted import parity price at that time.) Prices paid to producers of 'old' oil, i.e., oil produced from fields discovered prior to 14 September 1975, were set for the three years ending 17 September 1978 as shown in the following table. These prices took into account the varying costs of the respective producers and their rates of return. It was also announced that the Industries Assistance Commission would be asked to review the pricing levels to apply between 18 September 1978 and 17 September 1980. The prices paid by refiners reflected these prices plus the crude oil excise levy which had been introduced in August 1975 at the rate of $2.00 per barrel. In the Budget for 1977-78 the Government announced an increase in the crude oil levy from $2.00 to $3.00 per barrel. (The levy on naturally occurring LPG has been changed since 1975 but as it is outside the scope of the subject under discussion, it is not considered further in this appendix.) As a further incentive to oil exploration, the Government also announced that 'new' oil discovered after 18 August 1976 would, in addition to attracting import parity prices, not be subject to the levy. (That policy was reaffirmed by the Treasurer on 24 May 1979.) The 1977-78 Budget also embodied a major change to the then existing oil pricing policy. The new policy, which was broadly in line with the thrust of the Industries Assistance Commission's report on Crude Oil Pricing released in September 1976, left unaltered the existing$3.00 per barrel levy but introduced a significant change to the arrangements for determining prices paid to producers for old' oil. The new policy provided for producers of 'old' oil to receive import parity prices (less the levy) for an annually increasing proportion of production or 6 million barrels, whichever was the greater, from each field or new development within a field. The proportions announced were 10 per cent during the remainder of 1977-78, 20 per cent in 1978-79, 35 per cent in 1979-80 and 50 per cent in 1980-81. Beyond 1980-81 the phasing arrangements were still to be determined. The import parity price was to be determined each six months (on 1 July and 1 January respectively) by the responsible Minister. (In a statement on 27 June 1979 the Prime Minister announced that the Government would adopt a more flexible approach to the timing of price adjustments to take account of OPEC pricing decisions.) In determining that price, account is taken of the posted price of Saudi Arabian light 'marker' crude, freight and insurance costs to the nearest refinery port, and quality differences between Saudi 'marker' crude and oil produced from each Australian oil region, i.e., Bass Strait, Barrow Island and Moonie. Variations in freight and quality differentials result in relatively small variations in import parity prices. Oil for which producers receive prices based on these arrangements may be described as *parity-related* oil; for the remaining oil produced from each field - which may be described as *controlled-price* oil - the producers receive the price which was current when the new arrangements were introduced. The prices received by producers and the prices paid by refiners for 'old' oil immediately following the 1977-78 Budget were: In the 1978-79 Budget the Government raised the price paid by refineries for *all* domestic crude to the import parity level. The phasing-in arrangements in respect of 'parity-related' oil announced in the previous Budget were left unaltered and, in accordance with those arrangements, the proportion of oil for which producers received the 'parity-related' price was increased from 10 per cent to 20 per cent as from 1 July 1978. Under these arrangements the levy on controlled-price' oil was increased so that it was equal to the difference between the import parity price and the price paid to producers. The levy of $3.00 per barrel on 'parity-related' oil was left unchanged. Under those arrangements the outcome in 1978-79 was: On 29 June 1979 the Minister for National Development announced new import parity prices to apply from 1 July 1979 and new levy arrangements to apply to 'parity-related' oil. (Since 28 June 1979 prices charged by some OPEC members have included officially sanctioned market premia on the basic posted price charged by Saudia Arabia for its light 'marker' crude. Australian import parity price, however, continues to be based on the posted price of Saudi light marker' crude i.e., it excludes the market premia.) The levy arrangements in relation to 'controlled-price' oil from Bass Strait and Barrow Island remain unaltered as follows: The new levy arrangements for 'parity-related' oil distinguish between fields as follows : o For fields with an annual production of less than 2 million barrels, the levy remains at $3 per barrel. The outcome from 1 July 1979 for these fields, including total production at Moonie is: - o For fields with an annual production of at least 2 million but less than 15 million barrels, the levy is $3 per barrel *plus* 75 per cent of increases after 30 June 1979 in the import parity price. Consequently, the return to producers now is their return from 1 January 1979 *plus* 25 per cent of increases after 30 June 1979 in import parity prices. The outcome from 1 July 1979 is:- o For fields with an annual production of 15 million barrels or more, which covers only certain Bass Strait fields, the levy from 1 July 1979 to 31 December 1979 is $3 per barrel *plus* the increases on 1 January and 1 July 1979 in the import-parity price. This leaves the returns per barrel to the producer at their levels from 1 July to 31 December 1978. The outcome between 1 July and 31 December 1979 is: - o From 1 January 1980, the present return to producers in respect of these Bass Strait fields of $9.59 per barrel will be indexed according to increases in the Consumer Price Index after the December quarter of 1978 or increases in import parity prices after 1 July 1979, whichever is the lesser. The levy will take up the balance of the import parity price. As in 1978-79, the prices charged to refineries are the import parity prices. The phasing towards 'parity-related' prices to producers up to and including 1980-81 remains as indicated above, with 6 million barrels per annum or 35 par cent of the production of each field, whichever is greater, attracting a 'parityrelated' price in 1979-80. Beyond 1980-81 it has been announced that, for fields producing less than 15 million barrels per annum, the Government reaffirmed its in-principle decision to continue phasing towards a 'parity-related' price to producers beyond 50 per cent, but that, for fields producing more than 15 million barrels per annum, it does not intend that the proportion be increased above 50 per cent. {: .page-start } page 275 {:#debate-102} ### STATEMENT No. 5- BUDGET OUTCOME, 1978-79 Total outlays exceeded the Budget estimate by$1 75 million (0.6 per cent) in 1978-79 while total receipts fell short of the Budget estimate by $490 million (1.9 per cent). As a result the actual deficit of $3478 million exceeded the Budget estimate by $666 million. In summary, the main features of the 1978-79 Budget outcome were: o most of the increase in the deficit over the original Budget estimate was attributable to a shortfall in receipts; o the largest overruns on outlays were $109 million for unemployment and sickness benefits, $77 million on defence equipment and stores and $65 million for public debt interest payments - these and other overruns were partially offset by shortfalls in a number of areas; o the shortfall in receipts was largely the result of lower than estimated col lections of personal income tax by assessment and of company tax; and o these shortfalls in turn mainly reflected over-estimates of 1977-78 incomes on which these 1978-79 taxes were levied and greater than anticipated tax avoidance. {: .page-start } page 275 {:#debate-103} ### OUTLAYS The following table shows, for each major functional block, the difference between the Budget estimates and the actual outcome: The main variations from Budget estimates within functional headings are identified below: *Defence* - up $105 million Outlays on defence equipment and stores exceeded the Budget estimate by $77 million. This reflected re-scheduling by the US Navy of progress payments on patrol frigates being constructed for Australia; payments of $10 million for purchase of VIP aircraft which were not allowed for in the Budget estimates; cost increases, particularly for fuel and lubricants, which were not provided for; and exchange rate fluctuations. Manpower costs exceeded the Budget estimate by $22 million mainly because of increases in wages and salaries awarded during the year; provision was made in the Budget for such increases in the bulk allowance for wage and salary increases, rather than in the estimates for Defence as such. Other overruns included $5 million in respect of government factory operations (reflecting in part the provision of additional working capital to the Government Aircraft Factories to finance stocks of Nomad aircraft) and $2 million for the purchase of land at Puckapunyal for which no provision was made in the Budget. *Education* - down $4 million The small net change reflected some diverse movements. Mainly because the number of beneficiaries under the Tertiary Education Assistance Scheme fell short of that assumed at the time of the Budget, there was a shortfall of $10 million in outlays on student assistance. Expenditure by the Education Commissions, on the other hand, exceeded the Budget estimate by a net S6 million; grants for universities, colleges of advanced education and schools were, in aggregate, $18 million greater than originally estimated but there were shortfalls totalling $12 million in grants to the States for technical and further education because the latter's cash-flow requirements turned out to be different from those assumed at Budget time. *Health* - down $12 million There were several variations from Budget estimates within this function. Medical benefits payments overran the Budget estimate by $34 million because the lag between the provision of medical services and the submission of claims to the Commonwealth under the revised medical benefits arrangements proved to be shorter than that assumed at the time of the Budget. The post-Budget decision to provide $11 million to Medibank Private to ensure that the Fund remained actuarially solvent also had the effect of adding to the original Budget estimates. These overruns, however, were more than offset by shortfalls in several areas. Commonwealth hospital payments fell short of the Budget estimate by $23 million; this reflected, mainly, lower than estimated operating deficits of hospitals covered by cost-sharing arrangements. Pharmaceutical benefits for the general population were down $14 million (because of lower than estimated usage) though this was offset to some extent by a $4 million overrun in respect of benefits paid for pensioners. Nursing Home Benefits and payments were $8 million less than the Budget estimate; the proportion of privately insured patients in nursing homes turned out to be higher than that assumed while prospective increases in benefit rates were less widespread than had been assumed. Outlays on the isolated patients travel and accommodation scheme were $5 million down on the estimate because of delays in commencing the scheme and lower than anticipated utilisation rates. Other shortfalls occurred in respect of general administrative expenses (down $13 million, reflecting lower than estimated costs incurred in assuming functions previously performed by Medibank, and lower agency payments to private health insurance funds for processing and payment of the Commonwealth medical benefit); the Community Health Program (down $4 million) and Health Program Grants (down $3 million). *Social Security and Welfare* - up $143 million As indicated earlier, expenditure on unemployment and sickness benefits was $109 million above the estimate; this reflected greater than assumed numbers of unemployment beneficiaries and a higher than estimated average rate of benefit. Family allowance payments exceeded the original estimate by $49 million; this resulted in part from the post-Budget decision not to proceed with an income test on the child's income for family allowances and in part from the recording in 1978-79 outlays of $22.7 million in respect of payments due on 3 July 1979. Overall, payments of pensions and allowances for the aged, veterans and their dependants, invalids, the handicapped, widows and supporting parents were $2 million less than had been budgeted for. (Within this category there were some diverse movements which reflected mainly variations between numbers of recipients assumed for estimates purposes and actual numbers.) Other small shortfalls occurred in the capital programs for aged persons' homes and hostels ($3 million), handicapped persons' facilities (S4 million) and the home care program ($3 million). *Housing* - up $6 million About $2 million of the overrun shown for this function reflects the change to administrative arrangements in December 1978, which resulted in the general administrative expenditures relating to housing being recorded here. Previously these expenditures were subsumed in administrative votes of the former Department of the Environment, Housing and Community Development and recorded in the heading Urban and Regional Development nec and the Environment: there is a corresponding decrease on the Budget estimate for that function. Outlays for Defence Service Homes were S5 million above the estimate. This reflected, in the main, an increase in the level of the interest subsidy to maintain existing rates to borrowers (following the decision to progressively apply interest rates more in keeping with current interest rates to the Corporation's capital) and lower than estimated receipts from the sale of surplus land holdings. *Urban and Regional Development nec and the Environment* Total outlays for this function were very close to the Budget estimate. The reduction on the Budget estimates associated with the changed administrative arrangements mentioned under Housing was largely offset by a S2 million overrun in expenditure by the NCDC on sewerage, garbage and drainage facilities in the A.C.T. *Transport and Communication* - down S46 million The shortfall here results mainly from a decision taken by Qantas Airways Ltd on commercial grounds to advance to 1978-79, repayments of $74 million for aircraft loans originally scheduled for 1979-80. Other reductions on Budget estimates included $4 million on account of additional capital repayments from the Postal Commission (reflecting the greater than expected profitability of the Commission) and $3 million in respect of the railway mainline upgrading program (because of delays in implementation). These shortfalls were partly offset by a number of expenditure overruns. An additional $5 million was paid to the Australian National Railway (ANR) to accelerate work on the construction of a standard gauge railway between Tarcoola and Alice Springs. In addition, new financial arrangements approved after the Budget resulted in an increased provision of S 1 1 million for ANR's operating losses. (These new financial arrangements require interest payments by ANR on borrowings from the Commonwealth, and generated offsetting receipts of S 1 1 million which are recorded in Receipts under Interest, Rent and Dividends). Recoveries from the air transport industry were S18 million less than projected, partly because the decision to introduce additional revenue measures (estimated to raise S8 million in 1978-79) to facilitate full cost recovery from the domestic trunk sector was not proceeded with and partly because the disposition of airport rental receipts held in trust was not determined in 1978-79. An additional $6 million was provided to the Department of Transport for civil aviation services to enable it to maintain service and safety standards. *Industry Assistance and Development* - down S28 million Overruns on Budget estimates occurred in respect of fertilizer bounties (S7 million) and the petroleum products subsidy scheme (S8 million), the latter reflecting a larger than assumed freight cost differential. These were more than offset by shortfalls in beef industry assistance payments (down $9 million, largely because residual payments for this scheme were less than estimated); net outlays on cattle disease eradication (down S6 million, mainly because of lower than estimated slaughter compensation payments and higher collections from the livestock slaughter levy); price support for dairy products (down $5 million, reflecting improved export market returns for skim milk powder and reduced butter production); and rural adjustment assistance (down $2 million). Other shortfalls occurred in respect of payments for the Ranger uranium project and for coal research (down $3 million in each case). Improved copper prices resulted in net payments to the Mount Lyell company being S2 million less than the Budget estimate. *Labour and Employment* - down $10 million Outlays on apprenticeship training under the CRAFT Scheme fell short of the Budget estimate by $10 million, mainly because of fewer than expected claims by employers for technical education rebates. Payments under the NEAT System were $4 million lower than estimated. On the other hand, payments to the Stevedoring Industry Finance Committee were $2 million greater than the estimate; this reflected a mid-year rate increase in the industry levy, the proceeds of which the Commonwealth passes on to the Committee. {:#subdebate-103-0} #### Foreign Affairs and Overseas Aid Overall, total outlays for these purposes were close to the Budget estimate. Within the total, however, major variations included an increase of $5 million in payments to the UN High Commissioner for Refugees by way of additional assistance to Indo-Chinese refugee relief, offset by a shortfall of $5 million in the budgeted provision for the International Development Association which occurred because that organisation did not seek all the funds originally anticipated. *Administrative Services* - down $14 million Although an additional $8 million was required for greater than estimated expenses associated with the flotation of overseas loans, this was more than offset by shortfalls in expenditure on the construction and maintenance of Commonwealth offices ($4 million); expenditure on Construction Services ($4 million); and by a $5 million reduction in rental costs of civil departments. *Payments to or for the States, the Northern Territory and Local Government Authorities nec* - up $14 million The overrun under this heading was associated mainly with greater than estimated expenditure in respect of natural disasters ($11 million). States' tax sharing entitlements were $2 million greater than originally estimated because of revisions to earlier projections of the wage and population parameters used in calculating guaranteed levels of payment. *Public Debt Interest* - up $65 million The increase of $65 million for public debt interest payments is attributable mainly to greater than estimated sales of Treasury Notes. The interest liability for such securities is recorded in the year of issue so that changes in net sales of Treasury Notes have substantial and immediate implications for interest payments. {: .page-start } page 281 {:#debate-104} ### RECEIPTS The differences between the Budget estimates and actual receipts in 1978-79 are set out in the table below; the accompanying notes comment briefly on the main variations. *Customs Duty - Imports* - down $99 million The shortfall was the net result of a higher level of imports (clearances of potable spirits being an exception) and a lower ratio of duty to dutiable imports than anticipated at Budget time. *Excise Duty* - down $40 million Revenue from levies on crude oil and LPG was $41 million higher than the Budget estimate, reflecting the increased parity price of indigenous crude oil following the OPEC price increases announced in December 1978. Budget estimates for beer, potable spirits and tobacco products, on the other hand, proved to be too high, reflecting: o inadequate allowance for the reduction in sales following the duty increases; o a higher proportion of clearances at pre-Budget rates of duty than had been assumed; and o post-Budget revisions to some 1977-78 clearance figures on which the estimates were based. The following table compares the 1978-79 revenue outcome for individual commodities with the Budget estimates and the revenue outcome for 1977-78: *Sales Tax* - down $31 million Lower sales of commodities in the27½ per cent category largely accounted for the shortfall in sales tax collections. Sales of commercial vehicles were a little lower than estimated at the time of the Budget but sales of motor cars and station wagons exceeded the Budget estimate. *Income Tax on Individuals - Pay-As-You-Earn* - up $57 million The net increase in PAYE collections over the Budget estimate reflects underestimates of gross PAYE receipts (by $107 million) and refunds (by $50 million). At the time of the Budget it was assumed that average weekly earnings would increase by 7½ per cent in 1978-79 and employment by *i* per cent. In the event earnings increased by an estimated 83- per cent and wage and salary earner employment rose slightly more than projected. *Income Tax on Other Individuals* - down $193 million A major part of the shortfall is attributable to lower collections on current assessments because of increased recourse to tax avoidance schemes. This is estimated to have reduced collections by about $110 million more than the allowance incorporated in the Budget estimate. Property incomes and incomes of 'other businesses' in 1977-78 (on which tax was paid in 1978-79) were also lower than estimated at the time of the Budget. *Income Tax on Companies* - down SI 85 million The Budget estimate for company tax collections in 1978-79 assumed a small overall increase in income subject to tax in 1977-78; in the event, returns indicated a small decline. In addition, it is estimated that tax avoidance schemes resulted in a loss to revenue of about $70 million. *Estate Duty* - up $12 million The main reason for the variation here is that the average duty on assessments was greater than estimated at the time of the Budget. *Interest, Rent and Dividends* - up $1 million A shortfall of $13 million in interest received on general purpose advances from the States was largely offset by a receipt of $11 million from the Australian National Railways Commission which was not allowed for in the Budget figures. This receipt reflected the' new financial arrangements instituted in 1978-79 which require the Commission to pay interest on previous advances. The 1978-79 receipt represented interest charges from 1 July 1975. *Sale of Existing Assets* - down $9 million Receipts from the Department of Administrative Services for the sale of property and materials were $6 million less than estimated, mainly because of delays in sales of some properties. The remainder of the shortfall was largely accounted for by receipts from the sale of leases in the ACT, which were $2 million less than estimated. {: .page-start } page 283 {:#debate-105} ### FINANCING TRANSACTIONS The manner in which the Budget deficit in 1978-79 was financed is summarised in Tables 1 and 2. Table 1 is the presentation of Budget financing transactions, as published monthly in the Statement of Commonwealth Government Financial Transactions, rearranged to indicate the concept of *Domestic Borrowings* and its composition; see Statement No. 5 attached to the 1977-78 Budget Speech. While this presentation is useful for purposes of describing aggregate financing transactions and, in particular, the securities (financing instruments) involved in those transactions, it does not bring out the net changes in the holdings of government debt of the various sectors with which the Budget sector transacts. This further information is relevant to analysis of the monetary implications of the financing transactions. Portfolio movements, reflecting both net proceeds (subscriptions to new issues less redemptions) and subsequent market transactions in government securities, are shown in Table 2. The link between the tables is Domestic Borrowings. As defined here, Domestic Borrowings is that portion of the Budget deficit financed by the issue of Commonwealth securities to domestic non-Budget sectors or by the use (running-down) of Commonwealth cash balances with the Reserve Bank (see footnote (c) to Table 2). Subject to minor qualifications set out in Statement No. 5 attached to the 1977-78 Budget Speech, Domestic Borrowings thus represent the increase in the indebtedness of the Commonwealth to domestic non-Budget sectors arising from Budget financing. Economic effects of financing transactions depend importantly on which of the non-Budget sectors hold the stock of government debt and the changes in those holdings. Private sector holdings of Commonwealth debt constitute the bulk of the liquidity base of the economy (see also footnote (b) to Table 2). Private sector take-up of Commonwealth debt instruments reflects a large number of influences on domestic liquidity conditions, including the size of Domestic Borrowings, interest rates, private sector external transactions and Reserve Bank transactions with the private sector. Other things being equal, take-up of government securities by the non-bank private sector provides an offset to the direct increase in banking sector liquidity and the volume of money that would otherwise accompany an increase in the domestic liquidity base. Table 2 therefore distinguishes between banks and non-banks and, within each category, the major institutional groups which it is useful, and possible with available data, to identify. Changes in debt by the main forms of security are also shown. This too is relevant information for the analysis of the economic impact of Budget financing transactions, although a full exposition would go beyond the fairly direct effects of those transactions reflected in Table 2. Other relevant effects include those on the maturity structure of the stock of government debt in private portfolios, the level and structure of interest rates and associated expectations. Brief comments on the main items in Table 1 are provided below. {:#subdebate-105-0} #### Net Overseas Borrowings In July 1978 a syndicated bank loan was undertaken in the Swiss capital market, the proceeds of which amounted to $194 million. In August $120 million was raised through a direct bank loan from Algemene Bank in the Netherlands. Two borrowings were completed in Germany in September: a $108 million public bond issue and a $22 million Schuldscheindarlehen (a form of direct bank loan offered by German commercial banks). In October, the Commonwealth completed * two Yen institutional borrowings on the Japanese capital market, the proceeds of which were $186 million and $184 million, respectively. The Commonwealth's third public bond issue in Japan was undertaken in November and raised a total of $220 million in two tranches. In January the Commonwealth finalised a $132 million syndicated bank loan in the Netherlands. The first two components of a SF750 million borrowing package in Switzerland - a $132 million syndicated bank loan and a $132 million private placement - were finalised in February. In March negotiations were completed for the final component in the package - a $132 million public bond issue on the Swiss capital market. Repayments during the year of previous drawings on behalf of Qantas and TAA amounted to $91 million and $1 million, respectively. Repayments of $1 million were also made to Eximbank. Other securities to the value of $96 million were redeemed in the USA, UK, Canada, Switzerland, Germany, the Netherlands and Japan. In addition, repayments of $4 million were made on borrowings from the International Bank for Reconstruction and Development, with repayments amounting to $15 million also being made on borrowings previously undertaken for defence purchases in the USA. In summary, total gross overseas borrowings amounted to $1557 million'1'; total redemptions and repayments amounted to $208 million, giving net overseas raisings of $1349 million. *Other Financing Transactions in Australia* The major components of this category were: $28 million as proceeds from Australia's share of gold purchased from the IMF under its third redistribution (at the official price of 35 SDR per ounce) and sold to the Reserve Bank at prevailing market prices; $24 million in net proceeds from coinage transactions; $25 million received from the Commonwealth Superannuation Fund towards the {: type="1" start="1"} 0. The amounts shown in the text as the proceeds of individual raisings are the SA equivalents of the principal amount (at face value, where applicable) calculated by applying the exchange rate used by the Reserve Bank at the time of receipt of proceeds. The total gross overseas borrowings figure represents cash proceeds and therefore includes an adjustment for the issue of any securities at a discount/premium from face value and is net of any commissions. liability assumed by the Government in respect of the Fund's share of the liability for benefits existing at 1 July 1976; and net payments of $12 million by the Postal and Telecommunications Commissions, representing the Commissions' employer contributions to the Commonwealth superannuation scheme deposited with the Commonwealth. These transactions were partly offset by the investment of $30 million by the Income Equalisation Deposits Trust Account with the Primary Industry Bank of Australia in the form of deposits; and an amount of $19 million resulting from the operation of the Health Insurance Fund. Following changes to the health insurance arrangements effective from 1 November 1978 the Fund is being phased out. The reduction in its outstanding balance represents a catch-up of previously unpresented cheques. *Loan Raisings in Australia* *Australian Savings Bonds* raised $531 million gross in 1978-79; redemptions of these securities amounted to $186 million, and redemptions of the superseded Special Bonds $58 million, resulting in net proceeds of $287 million. Gross proceeds from the issue of *Treasury Notes* amounted to $4245 million; redemptions amounted to $3198 million. As at 30 June- 1979 total Treasury Notes on issue (including Reserve Bank holdings) amounted to $1410 million, an increase of $1047 million over the year. One Government public cash loan was held in 1978-79 (August), resulting in cash raisings of $781 million. Public conversion loans were held in August, November, February and May with conversions totalling $1492 million (face value). Total redemptions and repurchases amounted to $122 million. An amount of $33 million was received into Income Equalisation Deposits (IED's) in 1978-79; redemptions of IED's amounted to $20 million. States' domestic loan raisings were $36 million, bringing net proceeds of domestic loan raisings in 1978-79 (excluding Australian Savings Bonds and Treasury Notes but including IED's) to $702 million. The Loan Council has recently agreed to the introduction of tender arrangements for selling Treasury Notes and a 'tap' issue system for selling Commonwealth Treasury Bonds. Formal implementation of these new arrangements will occur during 1979-80 following completion of necessary legal and technical processes. These arrangements will replace the present system whereby Treasury Notes are on continuous issue and Treasury Bonds are issued through periodic cash loans. {:#subdebate-105-1} #### Residual Financing Borrowings from the Reserve Bank in the form of Treasury Bills amounted to $500 million. At the same time, cash balances held by the Commonwealth increased by' $454 million; this largely reflected proceeds from Commonwealth loans raised overseas in 1978-79 which were not drawn on in 1978-79. Table 2 indicates that private sector holdings of government securities increased by $1599 million over 1978-79; Treasury Note holdings rose by $794 million while other securities (mainly Treasury Bonds and Australian Savings Bonds) rose by $805 million. A brief descriptive account of factors affecting these portfolio movements is contained in the *Monetary Conditions* section of Statement No. 2; Table 1 1 of that Statement provides quarterly data in the format of Table 2. Total private non-bank take-up of $713 million was equivalent to 32 per cent of the Budget contribution to private sector LGS assets. {: .page-start } page 288 {:#debate-106} ### RELATIONSHIP OF DEFICIT TO NET MOVEMENT IN SECURITIES ON ISSUE As is evident from Table 1, most financing transactions involve the issue, repurchase, redemption or acquisition of Commonwealth Government securities, although some involve or are represented by changes in other assets or liabilities of the Commonwealth Government. A reconciliation of the deficit with the net movement in securities on issue can therefore be made. (Details of securities on issue are published in Budget Paper No. 6). For this purpose, total financing can be disaggregated as: Net sales of Commonwealth Government securities (new issues, *less* redemptions, *less* net purchases from balances(1) in the Trust Fund), *less* net purchases of other investments from Commonwealth Government balances in the Trust Fund, *plus* other items of indebtedness (such as transactions of superannuation funds, and transactions associated with the issue of coin), *less* net additions to cash balances and borrowings from the Reserve Bank. The relationship between the items which finance the deficit and the net movement in securities on issue for years prior to 1977-78 is shown in Budget Paper No. 10 issued in August 1977. {: .page-start } page 289 {:#debate-107} ### STATEMENT No. 6- BUDGET TRANSACTIONS SINCE 1969-70 This Statement details Budget transactions since 1969-70 in both the functional and the national accounting classifications. It also provides data on the relationship between the Commonwealth Budget and other parts of the public sector. The *national accounts classification* categorises Budget transactions by economic type, within a framework which is broadly consistent with conventions recommended in the United Nations *System of National Accounts.* The classification provides a consistent framework for the aggregation of Commonwealth, State and local government transactions into consolidated figures for the public sector as a whole. It also clarifies the nature of transactions between the public sector and the rest of the economy and facilitates comparisons with other national accounts data. The *functional classification* categorises Budget outlays according to their primary objectives or purposes. It aims to facilitate consideration of the nature and relative priorities of Government outlays. The functional classification follows the same conventions for the determination of Budget totals as the national accounts classification. Additional information on the two classification systems is presented in the Appendix to the Budget Statements. {:#subdebate-107-0} #### Budget Outlays - Summary The table below shows increases in Commonwealth Budget outlays in each year since 1969-70 and the proportions of Gross Domestic Product (GDP) represented by those outlays: The increase of 8.4 per cent in 1978-79 was the smallest since 1968-69, when the increase was 6.2 per cent. The projected increase of 9.1 per cent in 1979-80 is slightly higher than in 1978-79 but smaller than any other increase recorded during the past decade. As a proportion of GDP, total outlays remained steady at around 24 per cent until 1974-75 when the proportion jumped to 29.1 per cent. It rose to 30.3 per cent in 1975-76 but has tended downwards since then. On the basis of present estimates a further reduction in the proportion can be expected in 1979-80. Budget Outlays by Function Budget transactions for the period 1969-70 to 1978-79, together with estimates for 1979-80, are shown for the major functional and sub-functional blocks in Table 1 at the end of this Statement. Table 2 shows the proportions of total outlays represented by each block over the period and Table 3 shows percentage increases for each block from year to year. Table 4 presents outlays data from Table 1 in greater detail. Between 1969-70 and 1978-79, total Budget outlays increased at an average annual compound rate of 16.5 per cent (compared with 14.4 per cent for GDP). Outlays on education, health, and social security and welfare all increased significantly faster than the total and accounted for more than half the total *increase* over the period. Together these categories represented 47 per cent of total outlays in 1978-79, compared with 27 per cent in 1969-70. On the other hand, over the period as a whole, there have been significant reductions in the proportions of total outlays devoted to certain functions, such as defence and economic services. Defence expenditure over this period reflected, inter alia, Australia's involvement in, and withdrawal from, the war in Vietnam; in 1978-79 defence expenditure increased faster than total outlays and a similar outcome is expected in 1979-80. The reduction in the relative importance of expenditure on economic services in recent years reflects, among other things, reductions in advances to the Australian Telecommunications Commission, Qantas Airways Ltd and the Australian National Airlines Commission consequent upon those authorities funding their capital expenditure through internally generated funds and by borrowings on their own account. The following table shows the increases in the main categories of outlays over the period 1969-70 to 1978-79: Average annual rates of increase over a period of years can mask significant changes within that period. The charts on the next page show movements in the relative sizes of the major functional blocks of outlays. It is emphasized that all these comparisons of relative movements in different blocks of expenditure are affected by a number of important factors, including the transfer of payroll tax to the States, changes in the arrangements for funding tertiary education, changes in the operation of certain retirement benefits schemes, the replacement of tax rebates for dependent children by family allowances, changes in health care funding arrangements, the transfer of the South Australian and Tasmanian railways to the Commonwealth, the granting of self-government to the Northern Territory, and off-budget funding of the capital programs of Commonwealth authorities such as the Australian Telecommunications Commission. These and other factors, such as differential rates of price increase, affect relative rates of growth and must be borne in mind when comparing movements in different categories of expenditure. Budget Outlays by Economic Type The National Accounts 'economic type' classification provides information on Budget outlays in terms of direct expenditure on goods and services and transfers of income and capital funds to other sectors, namely the State and local government sector (including the Northern Territory), the private sector, and overseas. This format enables" Budget sector transactions to be related to transactions elsewhere in the public sector (see the final section of this Statement and Budget Paper No. 10: *National Accounting Estimates of Receipts and Outlays of Commonwealth Government Authorities)* and to the economy as a whole (see Budget Paper No. 9: *National Income and Expenditure 1978-79).* Table 5 at the end of this Statement shows Budget outlays classified by economic type. The following table shows increases in the main economic type components of Budget outlays over the period 1969-70 to 1978-79: Trends in the proportions of the major economic type components over this period are shown in the charts on the next page. These movements also must be viewed against the background of the various changes in Commonwealth financing arrangements referred to earlier. {:#subdebate-107-1} #### Budget Receipts Details of Commonwealth Budget receipts for the period 1969-70 to 1978-79, together with the 1979-80 estimates, are shown in Table 6 at the end of this Statement. Total Budget receipts increased at an average annual compound rate of 15.2 per cent between 1969-70 and 1978-79 (compared with 16.5 per cent for outlays and 14.4 per cent for GDP); there were, however, major fluctuations in rates of growth over this period. Details of the rate of growth in Budget receipts over the period 1969-70 to 1978-79 are shown in the following table: The charts on the following page show the relative importance of the various categories of receipts over the past decade. They show that, over the longer term, the increase in importance of income tax on individuals as a source of revenue has been accompanied by decreases in the relative size of most of the other major categories of receipts. The figures for personal income tax in the past three years reflect the net effects of, inter alia, the Government's decisions on personal income tax indexation and rate changes, the abolition of tax rebates for dependent children which accompanied the introduction of family allowances, and the imposition and subsequent removal of the Health Insurance Levy. The decrease in 'Other General Taxation' reflects, inter alia, the transfer of payroll tax to the States in 1971 and the abolition of broadcast listeners' and television viewers' licences in 1974. {:#subdebate-107-2} #### The Deficit and Financing Transactions In each of the past ten years there has been an overall deficit in the Commonwealth's budgetary transactions. The following table shows the size of the total deficit in relation to GDP since 1969-70. Also shown are the estimated 'domestic' and 'overseas' deficits and surpluses. There is no satisfactory single measure of the economic impact of Budget transactions. Although the Budget deficit (or surplus) is often taken as a shorthand or summary measure of budgetary impact, its use for this purpose is subject to some important qualifications. Essentially, the deficit does little more than indicate the difference between aggregate outlays and aggregate receipts; it cannot adequately reflect the differing economic impacts of the various components of total outlays and receipts, or of changes in those components. This means that the mix' of Budget outlays and receipts, as well as their total size, can be very relevant to the assessment of the Budget's overall impact on the economy. Moreover, as is pointed out in the next section, it is important to remember that the Budget deficit is only part of the total deficit of the Commonwealth sector. For analytical purposes it is often useful to distinguish between domestic and overseas transactions: government payments made overseas do not add directly to domestic incomes and the demand for locally produced goods and services, while government receipts from overseas sources increase total receipts without withdrawing purchasing power from the domestic private sector. In the above table overseas transactions have been netted out to arrive at estimates of domestic and overseas deficits (or surpluses). The transactions by which the overall Budget deficit is financed are also of considerable significance for monetary conditions and economic developments generally. Table 7 at the end of this Statement provides a summary of Commonwealth Government Budget Financing Transactions for each year since 1969-70. The main actions taken to finance Budget deficits have been domestic and overseas loan raisings, the issue of Treasury Notes, and borrowings from the Reserve Bank through the issue of Treasury Bills and other securities. Budget Statement No. 5 includes an outline of the significance for monetary conditions and monetary policy of Budget financing transactions. The Budget and The Public Sector as a Whole The Commonwealth Budget is only part - albeit an important part - of the public sector as a whole. The make-up of the total public sector is shown in the following diagram: This section outlines briefly the linkages between the Commonwealth Budget and the other parts of the public sector and indicates some broad trends in the public sector and its main components over the past decade. {:#subdebate-107-3} #### Commonwealth Sector Table 8 attached to this Statement sets out, in national accounts form, transactions of the total Commonwealth sector for the period since 1969-70. This sector comprises the Commonwealth Budget and Commonwealth authorities that operate outside the Budget, including the Australian Postal and Telecommunications Commissions, the Australian Shipping Commission, the Australian Wool Corporation, Qantas and TAA. The following table summarises the transactions of the sub-sectors of the Commonwealth sector in 1978-79 (additional information is presented in Budget Paper No. 10: *National Accounting Estimates of Receipts and Outlays of Commonwealth Government Authorities):* As the table shows, the Budget clearly dominates the total Commonwealth sector, although non-Budget authorities make important contributions in certain areas. In particular, the bulk of Commonwealth direct capital expenditure is attributable to non-Budget authorities. Until 1976-77 almost all capital expenditure by authorities operating outside the Budget was financed by advances from the Budget and by the internally-generated funds of the authorities concerned. Since then, however, a number of these authorities have undertaken substantial borrowing on their own account to help finance their capital programs. One consequence of this has been that the deficit of the non-Budget sub-sector in recent years has ceased to approximate the level of advances to the non-Budget sub-sector from the Budget; in 1978-79, for example, the proportion of the non-Budget deficit met by Budget advances was 22.8 per cent. It follows also that the deficit of the total Commonwealth sector as a whole has taken on greater significance in its own right. Figures for the past decade are shown in the following table: {:#subdebate-107-4} #### Total Public Sector {:#subdebate-107-5} #### Outlays The transactions of the Commonwealth sector can be consolidated with those of the States and local government authorities to derive transactions of the public sector as a whole. The following table - and Chart 1 - show outlays as proportions of GDP for the public sector as a whole and for its two components. The notable feature of the chart is the jump, for both sectors, in outlays as a proportion of GDP in 1974-75. Over one-third of total outlays of public authorities take the form of transfers and advances to other sectors of the economy, e.g. cash benefits to persons, subsidies, interest payments and housing loans to members of the public. The remainder represents direct public sector demands on goods and services. The next table - and Chart 2 - show trends in this category of outlays for the major components of the total public sector; they illustrate the relatively stronger growth in net expenditure on goods and services by the State and local government sector in recent years. {:#subdebate-107-6} #### Receipts Total public sector receipts are dominated by Commonwealth Budget receipts which, in turn, are dominated by income taxes. The following table shows trends in major public sector receipts as proportions of GDP: The table shows that public sector receipts did not jump as sharply as outlays did in 1974-75. The fact that the State and local government sector has maintained the higher ratio of outlays to GDP it achieved in 1974-75 reflects, inter alia, the transfer of an increased proportion of Commonwealth receipts to the State and local government sector. {:#subdebate-107-7} #### Deficit The divergence between rates of growth in public sector outlays and receipts mentioned above is reflected in the relatively high public sector deficit figures recorded each year since 1974-75: Part of the deficits of the State and local government sector is financed by advances from the Commonwealth sector, though the proportion has declined in recent years (from 57.3 per cent in 1974-75 to 36.2 per cent in 1978-79). One corollary of this is that borrowings other than from the Commonwealth - such as through semi-government and local authorities' borrowing programs - have become an increasingly important source of funds for the State and local government sector. Another is that, for monetary policy purposes, it is the total public sector deficit which is important, not just the Commonwealth Budget deficit. Notes on Tables To the extent practical, historical data have been adjusted to eliminate major breaks in series; however, some important changes affecting comparability cannot readily be removed. At the Premier's Conference in June 1971 it was agreed that the Commonwealth Government would cease to levy payroll tax in the States as from 1 September 1971 and that the States would levy their own payroll taxes as from that date. This decision resulted in a reduction in Commonwealth payroll tax revenues estimated at $253 million in 1971-72. To offset most of this loss in revenue, the Commonwealth reduced its financial assistance grants to the States in 1971-72. The full-year effect of these transfer arrangements is reflected in the 1972-73 figures for outlays and receipts. The transfer arrangements had the effect of reducing the growth of Commonwealth Budget outlays and receipts below the rates that would otherwise have been recorded by approximately 3 percentage points in 1971-72 and by about 1 percentage point in 1972-73. The figures shown in the tables reflect these lower growth rates. Comparisons between 1972-73 and subsequent years are not affected by the transfer since no significant effects of the changeover continued beyond 1972-73. The assumption by the Commonwealth Government in 1973-74 of full financial responsibility for universities and colleges of advanced education contributed to an increase in outlays classified to 'Education' but also involved a compensating decrease in general purpose funds provided to the States. As a consequence, the rate of increase in Commonwealth Government resources devoted to education, as shown for the function 'Education' in 1973-74, is somewhat over-stated. A similar effect occurred in 1974-75, which was the first full financial year of the new tertiary education arrangements. Changes in the operation of the Defence Force Retirement and Death Benefits, Ministerial Retiring Allowances and Parliamentary Retiring Allowances Schemes affect outlays for 1973-74 and subsequent years under the relevant functions and receipts under the heading 'Other Taxes, Fees and Fines - Unfunded Retirement Benefits Contributions'. These changes involved a move from funded schemes to unfunded benefit schemes. The implementation of a new Commonwealth Superannuation Scheme on 1 July 1976 gave rise to similar effects. The scheme of Family Allowances introduced in 1976-77 involved the abolition of taxation rebates for dependent children and students, offset by substantial increases in family allowances in place of child endowment. The effect of this measure was to increase significantly the level of outlays under the 'Social Security and Welfare' function in 1976-77, and to increase receipts from personal income taxation above what they would otherwise have been. On 1 July 1978 the Northern Territory became a self-governing territory. Functions transferred to the Ministers of the Territory from that date are mainly those of a State-type character; this is true also of the functions transferred to the Northern Territory on 1 January 1977. In terms of financial arrangements, 1977-78 and 1978-79 were transitional years. During those years the Commonwealth provided the bulk of its assistance to the Northern Territory through global (general purpose) allocations which were recorded under the heading Not Allocated to Function - Payments to or for the States, the Northern Territory and Local Government Authorities nec'. Prior to 1977-78, outlays in respect of the Northern Territory were undertaken as direct Commonwealth outlays, rather than payments to the Territory; these direct Commonwealth outlays were classified under appropriate functional headings. From 1979-80 Commonwealth financial arrangements with the Northern Territory will mirror those which exist between the Commonwealth and the States. In 1979-80, in place of a global allocation, the Territory will receive a combination of specific purpose and general purpose payments, the former classified to the relevant functions and the latter to 'Not Allocated to Function - Payments to or for the States, the Northern Territory and Local Government Authorities nec'. Notes on Tables 1 to 4: Budget Outlays Classified by Function Wherever possible, the definitions and concepts adopted for the historical series are the same as those used in Statement No. 3 (although Table 4 provides less detail than do the tables in Statement No. 3). **Major discontinuities** are indicated where appropriate. The 1956-66 Housing Agreement was not renewed on its expiry at the end of 1970-71. Instead, the Commonwealth and State Governments agreed on arrangements under which housing allocations were to be met by States out of their approved Loan Council borrowing programs. Amounts totalling $160 million in 1971-72 and $166.9 million in 1972-73 were subsequently allocated by the States for housing projects similar in nature to those covered by the 1973 Housing Agreement. Tables 1 to 4 show these amounts classified to 'Payments to or for the States, etc' instead of 'Housing'. Grants to the States for pensioner accommodation in 1977-78 and previous years are recorded under 'Social Security and Welfare'. In 1978-79 the scope of this scheme was extended to allow wider eligibility and give the States greater flexibility in the application of the grants. In the light of these changes, grants under this program in 1978-79 and later years are now classified to the 'Housing' function. The figures in Tables 1 to 4 are not comparable in all respects with those given in the Budget documents in previous years because of certain revisions in the classification of items to the various functional headings (see Appendix to the Budget Statements). {: .page-start } page 322 {:#debate-108} ### APPENDIX: THE FUNCTIONAL CLASSIFICATION OF BUDGET OUTLAYS The functional classification brings together outlays directed towards like objectives or purposes. As such it facilitates meaningful presentations of information on the nature of government activities and on the resources devoted to particular objectives. Basis of the Functional Classification The functional classification is applied to Budget aggregates derived using national accounting conventions and is therefore consistent with the economic (national accounts) classification of Budget data. The conventions and principles adopted are broadly those set out in the 1968 United Nations publication *A System of National Accounts* which provides widely accepted international standards for the classification of public sector outlays. The major functional headings adopted for Budget purposes are conceptually consistent with those used by the Australian Statistician in his publications, but it should be noted that in the latter's publications Commonwealth Government transactions cover both Budget transactions (shown in the Budget Statements) *and* transactions of Commonwealth Government authorities which operate outside the Budget sector. Information on the transactions of authorities operating outside the Budget sector is shown in the document *National Accounting Estimates of Receipts and Outlays of Commonwealth Government Authorities* published with the Budget. Two further significant differences should be noted. First, outlays on primary industry assistance are shown in the Budget Statements 'net' of the relevant primary industry levies and charges but are shown on a gross basis by the Statistician. Secondly, net proceeds from the sale of uranium from the Commonwealth stockpile under arrangements made with certain companies are shown in the Budget Statements as revenues from sales of existing assets; in the Statistician's publications these transactions are treated as reductions in stocks and are netted off outlays. The Structure of the Functional Classification The contents of each function are described briefly in the final section of this Appendix. It will be evident from those descriptions that the functional classification is relatively aggregative in nature. Outlays under each functional heading, however, have been grouped together into identifiable and meaningful blocks which lend themselves to comment and analysis. These blocks do not always represent detailed purpose-oriented sub-functions or programs; generally speaking it is not possible, for example, to dissect administrative outlays of departments and to allocate them to particular sub-functions. Given the need to monitor actual outlays and receipts monthly, and on a basis consistent with the annual estimates in the Budget documents, it has been necessary to work largely from existing central accounting records. These records are built around the Appropriation Acts, which are the legal authority for expenditure rather than detailed costing documents. The figures in the functional classification, therefore, have been derived essentially by reclassifying appropriation data, supplemented by a limited amount of additional data on large appropriation items which cover more than one function or purpose. Functional categories do not necessarily correspond with appropriation or departmental structures. Furthermore, some outlay and receipt figures are netted in arriving at aggregates. Expenditure votes and revenue heads under the control of a particular department may, therefore, be classified under more than one functional heading and it is not always possible to identify individual appropriation items in the Budget Statements. A reconciliation between total outlays shown in Statement No. 3 and in the appropriations of the Consolidated Revenue Fund is set out in Tables 1 and 2 of Budget Document No. 4 *Estimates of Receipts and Summary of Estimated Expenditure.* Although the basic aim of a functional classification scheme is to reveal the broad purposes for which government outlays are undertaken, such a classification cannot always be applied unambiguously. Particular outlays will often serve two or more distinct functions: military colleges, for example, may be said to serve both a defence and an education purpose. The application of a functional classification scheme therefore requires that an outlay be classified to the function which it is considered primarily to serve. In the example quoted, the primary function is considered to be defence; this is in line with United Nations recommendations . Any single classification system cannot, of course, focus at one and the same time on every outlay characteristic that may be of interest to all users. Supplementary information on particular aspects of outlays is therefore provided in other documents; details of wage and salary estimates, for example, are shown in the document *Estimates of Receipts and Summary of Estimated Expenditure* and a separate Budget Paper is provided on *Payments to or for the States, the Northern Territory and Local Government Authorities.* Other Budget Papers issued with the Budget Speech deal with the *Civil Works Program* and *Australia's Overseas Development Assistance Program.* {:#subdebate-108-0} #### The Implications of Using National Accounting Conventions The principles underlying the national accounting presentation of Budget data are set out in the Appendix to the supplement to the Treasury Information Bulletin entitled *National Accounting Estimates of Receipts and Expenditure of Australian Government Authorities, September* 1974. The use of definitions of Budget outlays and receipts based on national accounting conventions places Budget data on a basis which can be related readily to national accounts data published by the Australian Bureau of Statistics. The adoption of these conventions requires that, the receipts and outlay figures in the Statements attached to the Budget Speech show the *net* transactions of the Budget Sector with the rest of the economy. Some important characteristics of the national accounting treatment followed in the Statements are: {: type="a" start="a"} 0. The transactions of various Funds forming the Public Account (the Consolidated Revenue Fund, Trust Fund and Loan Fund) are consolidated and inter-fund transfers are eliminated. For example, payments to Trust Accounts are not shown as part of outlays; rather, the expenditure from Trust Accounts is included. The aim is to record the transactions between the Budget sector and the rest of the economy; 1. Receipts derived from activities which are essentially of a governmental nature, involving regulation and compulsory payment, are normally treated as revenue items. As mentioned earlier, however, various primary industry levies and charges which are collected by the Government and applied more or less directly for the purposes of commodity stabilisation, research and promotional activities are offset against the relevant outlays. Other recoveries and repayments are normally offset against the relevant outlays to arrive at net figures. For example, repayments of principal on advances are offset against the corresponding advances. Bringing together the relevant outlays and recoveries or repayments facilitates assessment of the extent to which resources are directed through the Budget to a particular activity. Other taxes, compulsory charges and licence fees, which are of a general revenue nature, are treated as receipts items under the heading 'Other Taxes, Fees and Fines'; 2. Operating revenues, net of operating expenses, of activities within the Budget Sector which are carried out as business-type enterprises are shown as receipts items, along with dividends and similar receipts from business enterprises operated outside the Budget Sector. The current operations of enterprises are therefore reflected in the Budget Statements to the extent that they contribute to general Budget revenues; and 3. Certain transactions which are netted in published totals of the receipts and payments of the Public Account are shown in gross form. The more important of these are interest on loans raised by the Commonwealth Government for State works programs and for the Australian National Airlines Commission and Qantas Airways Ltd. Interest paid on these loans is included under the outlay heading 'Public Debt Interest', while interest received on advances made to the relevant authorities is included as a receipts item. This has the effect of making the coverage of interest in the Statements the same as the coverage of the debt to which it relates. Changes in the Functional Classification From time to time, it is necessary to amend the functional classification to reflect changes in the organisation and coverage of government activities. The more significant changes this year relate to the treatment of *Payments to the Northern Territory Government.* The Northern Territory became a self-governing Territory on 1 July 1978. During 1978-79- a transitional year - financial arrangements between the Commonwealth Government and the Northern Territory were developed to bring the Northern Territory within a framework similar to that which exists for the States. For the transitional year the Commonwealth provided the bulk of its payments to the Northern Territory Government through a global allocation; this was included under the heading 'Not Allocated to Function - Payments to or for the States, the Northern Territory and Local Government Authorities nec'. There will be no comparable global allocation to the Northern Territory in 1979-80 when Commonwealth financial arrangements with the Northern Territory will mirror those between the Commonwealth and the States. This means that in 1979-80 the Northern Territory will receive general revenue assistance analogous to a State's tax-sharing entitlement, a local government tax-sharing entitlement, and appropriate specific purpose payments under arrangements similar to those which apply to the States. The Northern Territory will also receive an Additional Assistance Grant as general revenue assistance. In addition, the Territory will receive general purpose capital assistance analogous to a State Government Loan Council program, comprising one third grant and two thirds loan on the same terms and conditions as apply to the State Government Loan Council programs. For the purpose of the functional presentation of outlays in the Budget Statements, specific purpose payments to the Northern Territory in 1 979-80 are classified to the relevant functions (as is done for specific purpose payments to the States) and the general purpose payments are included under the heading 'Not Allocated to Function - Payments to or for the States, the Northern Territory and Local Government Authorities nec'. Grants to the States for pensioner accommodation in 1977-78 and previous years are recorded under 'Social Security and Welfare'. In 1978-79 the scope of these arrangements was extended to allow wider eligibility and give the States greater flexibility in the application of the grants. In the light of these changes, grants for pensioner accommodation in 1978-79 and 1979-80 are classified to the 'Housing' function. Historical data for the period 1969-70 to 1978-79 classified by function are presented in Statement No. 6. Because the functional classification is derived from the appropriation accounting system, adjustments to the historical series are constrained by the availability of data in that system. In particular, significant changes to departmental administrative arrangements have made it difficult to produce a strictly consistent series of outlays for the period covered in the Budget Statements. Wherever possible the more important discontinuities have been eliminated by sub-costing and regrouping appropriation data, but it has not been practicable to eliminate all inconsistencies. {:#subdebate-108-1} #### Description of Functions The following notes indicate briefly the nature and scope of the net outlays encompassed under each functional heading; they are not intended to provide a definitive listing of the contents of each category. {: type="1" start="1"} 0. *Defence* Outlays on military defence, including outlays to keep the armed services in a state of readiness. Includes outlays on central administration and on research in connection with activities carried out for defence purposes; outlays on military construction and equipment, inspection, transport and storage; all outlays on recruiting, training, equipping and housing the armed forces, and on medical care and other services for them; outlays on military colleges; expenditure for the provision of quarters for families of military personnel; outlays on pensions and other payments for military personnel under the Defence Forces Retirement and Death Benefits Scheme; outlays on civil defence; outlays on foreign military aid and contributions to international military organisations and alliances. {: type="1" start="2"} 0. *Education* Outlays on the provision, management and support of all levels of educational services, including schools, trade and technical courses, courses in music and fine arts and university and other higher education. Includes outlays relating to the provision of scholarships and allowances to students at all levels; special educational programs designed specifically for the benefit of Aboriginal students, for migrants and other special groups; expenditure on non-vocational adult education courses, school bus services and general administration, regulation and research activities related to education. {: type="1" start="3"} 0. *Health* Outlays on facilities or services for the prevention and treatment of human illness. Includes outlays related to the prevention of diseases, such as immunisation and vaccination programs; regulation of standards of sanitation, etc.; outlays concerned with the provision of hospital and clinical services, including treatment and care of those suffering from psychiatric disorders, infectious diseases, etc.; and expenditure on nursing schools associated with hospitals. Also includes the payment of hospital, nursing home, medical and pharmaceutical benefits which are designed to cover all or part of the costs of hospitalisation and medical treatment; health care of specific groups, such as Aboriginals, the aged, veterans and their dependants; community health centres, drug treatment centres, and domiciliary care services; general administration, regulation and research related to health matters. {: type="1" start="4"} 0. *Social Security and Welfare* Provision of pensions and allowances and other benefits to persons who, because of age, physical or mental disability, domestic circumstances or other reasons, are unable or not expected to earn a sufficient livelihood for themselves and their dependants. Includes the provision of benefits such as unemployment benefits, age and veterans' pensions, sickness benefits, other benefits to compensate for loss of income, and unemployment relief schemes. Provision of financial assistance towards the expenses associated with the bearing and raising of children, child care and pre-school facilities in the States, marriage guidance, other social security benefits, child welfare services and institutions, homes for and care of the aged and disabled, and welfare programs to meet specific needs of disadvantaged groups. {: type="1" start="5"} 0. *Housing* Outlays on the provision of dwellings for sale or rental, mortgage finance for purchase or construction of dwellings, and other financial assistance aimed at facilitating the purchase or construction of dwellings or home ownership. Also includes general administration, regulation and promotion of standards, and research in the field of housing. {: type="1" start="6"} 0. *Urban and Regional Development nec and the Environment* Urban and Regional Development nec: Outlays on general promotion and assistance for urban and regional planning and development. Includes outlays on decentralisation assistance and the development of new cities or towns where it is not possible to distinguish expenditure as being specifically for housing, roads, sewerage or other purposes, or it is not appropriate to classify the expenditure to other categories (e.g. in the case of major outlays for urban sub-division or renewal, including the purchase of land for such purposes); identifiable administrative costs associated with urban and regional planning and development activities, together with outlays for the provision of community amenities. Environment: Outlays on water quality control, air pollution and monitoring and other outlays related to pollution prevention and protection of the environment including identifiable outlays on research, planning and investigation. Sewerage and Sanitation: Outlays on the treatment and disposal of sewerage, refuse collection and disposal. {: type="1" start="7"} 0. *Culture and Recreation* Outlays related to the support of performing and creative arts; support of organisations concerned with sporting and other leisure-time activities, and provision of facilities serving purposes primarily related to these activities, such as swimming pools, community centres, athletic fields, etc.; contributions to youth and social organisations; outlays on the protection and preservation of historic sites and buildings, parks and wildlife reserves, and other elements pf the national estate; outlays on the provision and operation of radio and television broadcasting services. {: type="1" start="8"} 0. *Economic Services* This category covers regulation of, and assistance provided to, the private sector; direct government participation in economic activity and provision of economic infrastructure. {: type="A" start="A"} 0. *Transport and Communication.* Outlays concerned with postal services, and domestic and overseas telecommunications; outlays on construction, maintenance, promotion, administration and research relating to the various modes of land, sea and air transport, including urban transportation systems and pipelines for petroleum and gas transport. (Road traffic control services are shown under the category 'Law, Order and Public Safety'.) 1. *Water Supply and Electricity.* Outlays on construction and other assistance, regulation and research in connection with the production, transmission and distribution of electricity; and on the conservation, collection, purification and distribution of water primarily for domestic and industrial use. 2. *Industry Assistance and Development.* Direct assistance to primary, secondary or service enterprises in various forms including bounties, subsidies, export incentives, advances from the Budget and other transfers, including commodity price support arrangements; support of agricultural and other industrial research and development and of promotional activities, including export promotion; outlays on the management and development of timber and fishery resources', provision of veterinary, extension and other services to agriculture; land clearing, reclamation and settlement activities; outlays on programs of rural debt reconstruction and farm rehabilitation and adjustment; investigation, measurement, development and management of water resources for irrigation and pastoral purposes and rural flood mitigation; assistance for and encouragement of mineral exploration; geological surveys; development of tourist facilities and tourist promotion; administration, promotion, regulation and research directly associated with specific primary, secondary or service industries. 3. *Labour and Employment.* Outlays related to the regulation of working conditions, the prevention and settlement of industrial disputes and the enforcement of industrial awards and agreements; programs designed to facilitate changes of occupation by persons displaced by redundancy; occupational training schemes for adults, including assistance to enter or re-enter the work-force, provision of labour exchange facilities; outlays directly related to the assisted passage migration scheme; general administration, regulation and research in the field of labour and immigration affairs. 4. *Other Economic Services.* Outlays related to regulation of monopolies and restrictive trade practices, price control and justification, tariff regulation, other forms of business regulation; outlays on patents and trade marks administration, outlays on meteorological services and other technical services not allocable to specific kinds of industry; outlays on general administration in the area of economic and commercial affairs not allocable to other outlay categories within the 'Economic Services' function. {: type="1" start="9"} 0. *General Public Services* This category covers outlays on a number of general public services and activities concerned with the organisation and operation of government. {: type="A" start="A"} 0. *Legislative Activities.* Outlays of the legislative and executive bodies of government, including Parliamentary committees and the operation of the Governor-General's establishments; outlays related to the conduct of elections and maintenance of registers of voters. 1. *Law, Order and Public Safety.* Outlays on law courts (other than those concerned with industrial relations) and bodies concerned with the administration of the legal system and preparation and execution of law court action; provision of legal aid; registration of legal titles to property; outlays in respect of prisons and other places of detention and correction, and probation services; police services, including traffic control; fire protection and other public safety promotion or services; general administration and research related to these activities. 2. *Foreign Affairs and Overseas Aid.* Outlays of departments and agencies charged primarily with the handling of foreign relations; administration and other expenditure relating to external territories; outlays on overseas economic aid and contributions to international bodies other than military alliances and organisations. 3. *General and Scientific Research nec.* Contributions for the promotion of and outlays on basic and general research in the biological, physical and social sciences, which cannot readily be classified to other outlay categories or linked with the provision or promotion of a particular service or activity. 4. *Administrative Services.* Outlays on the collection of taxes, raising public loans, managing public debt, and controlling the disbursement and audit of public funds. Outlays on general services for the government as a whole, such as statistical services, the purchase and operation of government buildings and equipment (including the construction, repair and maintenance of general purpose buildings), rent, office cleaning, personnel and other administration. General administrative expenses of departments covering a variety of government activities (including in the ACT) and which cannot be readily apportioned over relevant functions arc also included under this heading. {: type="1" start="1"} 0. *Outlays Not Allocated to Function* 5. *Payments to or for the States, the Northern Territory and Local Government Authorities nec.* General purpose grants and advances to States, the Northern Territory and local government authorities which may be spent at the recipient's discretion and are not therefore classifiable to specific functions. This category includes payments to assist the States and the Northern Territory to meet debts charges. Payments to States and direct assistance for the relief of victims of drought, flood, fire and other natural disasters, and for the restoration of community services and facilities; longer-term reconstruction activities of a specific nature are, to the extent possible, classified according to purpose. {: type="A" start="B"} 0. *Public Debt Interest.* Net interest payments made from the Budget Sector to other sectors, including interest payments on government securities, or under credit arrangements with other countries. Interest received from Government investments in Commonwealth Government securities is offset against gross interest payments. {: .page-start } page 331 {:#debate-109} ### APPROPRIATION BILL (No. 2) 1979-80 Message from the Governor-General recommending appropriation for proposed expenditure announced. Bill presented by **Mr Howard,** and read a first time. {:#subdebate-109-0} #### Second Reading {: #subdebate-109-0-s0 .speaker-ZD4} ##### Mr HOWARD:
Treasurer · Bennelong · LP -- I move: >That the Bill be now read a second time. This Bill seeks appropriations of the Consolidated Revenue Fund in 1979-80 totalling $l,552.486m. The Bill provides for proposed expenditure on the construction of public works and buildings, the acquisition of sites and buildings, advances and loans, items of plant and equipment which are clearly definable as capital expenditure, grants to the States under section 96 of the Constitution and new policy initiatives not previously authorised by special legislation. Details of these proposed expenditures totalling $ 1,452.486m are set out in Schedule 2 to the Bill. Of this total, $754.7 18m was authorised by Supply Act (No. 2) 1979-80, the balance of $797.768m being authorised by this Bill. An amount of $100m is included in the Bill for the advance to the Minister for Finance. The main features of the proposed expenditure for 1979-80, of which this Bill will authorise part, were outlined in my Budget Speech. I commend the Bill to honourable members. Debate (on motion by **Mr Young)** adjourned. {: .page-start } page 331 {:#debate-110} ### BUDGET 1979-80 {: #debate-110-s0 .speaker-ZD4} ##### Mr HOWARD:
Treasurer · Bennelong · LP -I present the following papers for the information of honourable members in connection with the Budget for 1979-80: >Estimates of Receipts and Summary of Estimated Expenditure for the year ending 30 June 1 980. {:#subdebate-110-0} #### Civil Works Program 1979-80 Government Securities on Issue at 30 June 1979. Payments to or for the States, the Northern Territory and Local Government Authorities 1979-80. {:#subdebate-110-1} #### Australia's Overseas Development Assistance Program 1979-80 {:#subdebate-110-2} #### National Income and Expenditure 1978-79 {:#subdebate-110-3} #### National Accounting Estimates of Receipts and Outlays of Commonwealth Government Authorities {:#subdebate-110-4} #### Income Tax Statistics Ordered that the papers be printed. {: .page-start } page 331 {:#debate-111} ### AUSTRALIAN POSTAL COMMISSION {: #debate-111-s0 .speaker-GY5} ##### Mr STALEY:
Minister for Post and Telecommunications · Chisholm · LP -- I present the following paper for the information of honourable members: >Australian Postal Commission- Service and Business Outlook for the year 1 979-80. The publication in respect of the Australian Telecommunications Commission is not yet available. I am advised by the Commission that it will be available soon. I will present it for the information of honourable members at that time. Ordered that the paper be printed. {: .page-start } page 331 {:#debate-112} ### BUDGET MEASURES AFFECTING VETERANS {:#subdebate-112-0} #### Ministerial Statement **Mr ADERMANN** (Fisher-Minister for Veterans' Affairs)- by leave- As the Treasurer **(Mr Howard)** announced, some important increases and extensions in repatriation benefits will be effected in this financial year. I would like, for the benefit of honourable members, to provide details of these and other Budget measures which will concern veterans. I am pleased that the Government has been able to act now to improve very appreciably the lot of those who served their country in time of conflict and these measures certainly emphasise the Government's commitments to veterans and our determination to ensure that the continuing needs of veterans are met. When the Government came to office it had to review very carefully all fields of its expenditure and veterans ' affairs was no exception. Administrative expenses were cut back wherever possible without affecting the quality of treatment services available through the repatriation system or the level of compensation to disabled veterans and their dependants. Despite this, some significant improvements have been made. In 1976 we announced the indexation of the main repatriation pensions in line with movements in the consumer price index, the first increases under this new arrangement applying from May 1977. This has been 100 per cent indexation and not discounted. Indexation, which will now be twice yearly, **Mr Speaker,** has been one of the most significant developments in the history of repatriation. It has given our veterans and their families the security of knowing that their pensions are not eroded by inflation. In addition to indexation, repatriation pensioners enjoy freedom from taxation on disability pensions. This has placed them in a favourable position compared with a general community dependent upon wages and salaries. Despite the great value of indexation, however, the Government has not until now been in a position to increase many repatriation benefits, and particularly those which are directed at the most disadvantaged groups among the veteran population. It has now decided that the effective value of many of these benefits will be increased. As mentioned by the Treasurer, these allowances are to be increased from 1 November next. The increases are substantial. The funeral benefit, for instance, will be increased by $200 to a new level of $300. The benefit for an orphan of a veteran who has lost both parents will be increased by $4.10 to $25 weekly, and for an orphan who has lost one parent by half this amount. Seriously disabled veterans who require the help of an attendant will receive an extra $10.10 a week, making the new benefit $35 a week, while those less seriously afflicted will receive an increase of $2.80 a week, making the new weekly rate $ 17.50. Seriously disabled veterans, **Mr Speaker,** greatly suffer from a loss of social mobility unless special arrangements are made for them. Because of this, the recreation transport allowance for the most seriously handicapped is to be raised by $4 to $50 a month, and for the less seriously handicapped it will be raised by half this amount to $20 a month. Some veterans, because of the nature of these disabilities, are provided with cars at no cost to them, together with an annual allowance. As honourable members are aware, the cost of maintaining a car has risen considerably in the last few years, and so the Government has decided to increase the annual allowance for this purpose by $48 to a new figure of $480 a year. Because of their disabilities, certain veterans experience unusual wear and tear on their clothing. To help meet this cost,a small clothing allowance is provided at three different rates. As from 1 November, these rates will be increased, the highest rate being now $ 1 .50 a week. Whenever a veteran is required to travel in connection with repatriation pension or treatment matters, he is reimbursed travel and subsistence costs at set levels. These rates of reimbursement' have not been changed for some years, although costs to the veteran have increased markedly in the meantime. This Government has decided therefore that travel and subsistence allowances will be automatically adjusted in future in line with the levels paid to Commonwealth public servants. The daily subsistence rate for attendance for official purposes in a capital city will be increased by $18.65 to a new rate of $41.15, while the daily rate for attendance elsewhere will rise by $ 1 7.50 to $34.50. Some veterans, who live relatively near to the departmental office or hospital may not incur high costs, but in the event of their being required to attend during a mealtime, new rates up to $7.80 will apply from 1 November. Where it is medically necessary for a veteran to use his own motor vehicle for such official attendance, new rates of reimbursement, more in line with current costs, will be paid. Where it is not medically necessary for a veteran to use his own vehicle, he will normally be reimbursed at rates based on public transport travel costs. If he travels by rail, the standard will now be first class. In 1977, the Government decided that a review of all pensions paid in respect of pulmonary tuberculosis would be carried out to ascertain actual levels of disability in line with the general principles of the repatriation system. Rates for the TB pension were frozen at the May 1978 cash levels pending the outcome of the review, which is nearing completion. This decision placed the TB pensioners on the same footing as all other veterans and, in so doing, confirmed a principle, namely, that pension and treatment benefits be related to the degree of actual disability. The review has provided an opportunity for an accurate determination of the needs of veteran TB pensioners and a fully informed reassessment of their total situation. On the basis of this reassessment the Government has decided that eligibility for full, free medical treatment will apply immediately to those veterans who were receiving a pension for pulmonary tuberculosis before 2 November 1978. In addition, they will continue to receive for life a pension paid at a rate not less than the 100 per cent general rate applicable in May 1978 irrespective of the degree of actual incapacity. Veterans in receipt of the service pension, which is similar to the social security age pension, could be entitled to a pensioner health benefit card to show their eligibility for full, free medical treatment under the arrangements administered by the Department of Health. In considering eligibility, other income is considered, and in the case of veterans half of any disability pension is taken into account. The indexation of disability pensions has taken a number of Service pensioners beyond the limit of other income on which eligibility depends, and so they have lost PHB entitlement and eligibility for certain fringe benefits which all add up to a considerable saving in a year. The limit for PHB has been $33 a week in the case of the single pensioner and $57.50 in the case of a married pensioner. As for social security pensioners, these limits are to be lifted from 1 November to $40 and $68 a week respectively. The extension of Australian repatriation benefits to veterans who served in Allied, rather than Australian, forces during wartime has been an important issue for many years. Eligibility for the Service pension was extended to those who served in British Commonwealth forces in 1975, and in 1977 the Government accepted the argument that such eligibility should be extended to members of Allied forces now living in Australia. The need for maximum financial restraint has prevented this until now. I am sure that all members will agree that *those* who fought for the Allied cause in dme of war have considerable claim to benefit. In view of the tremendous contribution which they have made to this country since the war, it is only fitting that they should be eligible for the Service pension on a similar basis as Australian and British Commonwealth veterans. As announced, from the first pension payday in February next year, **Mr Speaker,** Allied veterans will be eligible to apply for the Service pension on the similar basis to that applying to British Commonwealth veterans. The exact details of this eligibility will be included in legislation to be introduced later in this session. Apart from indexation, the measures I have outlined tonight will cost $30m in a full year. The pension increases alone in November 1979 will cost $84m in a full year. The lifting of pensioner health benefit income limits will lead to additional Commonwealth expenditure through the Department of Health. This is a very considerable additional expenditure by the Government when you bear in mind that we were already spending more than $1.1 billion a year on maintaining the repatriation system. Let me repeat, **Mr Speaker,** more than $1.1 billion. It is estimated that pensions and allowances alone this year will amount to nearly $950m. Finally, **Mr Speaker,** I would remind honourable members that these increases in expenditure will add to a repatriation system which is outstanding by world standards. Compared with arrangements in other countries with comparable standards of living, the Australian repatriation system is generous. The Government has not been able to increase other than the main repatriation pensions for three years, but this has been a matter of priorities in which we were guided by continuing consultation with organisations representing veterans. Improving other benefits has been a large factor in the regular consultations between myself and my Department on one hand and the National President of the Returned Services League, **Mr Keys,** and the federal leaders of various organisations on the other hand. This has also been the subject of discussion whenever, as I do frequently, I visit subbranches of the RSL or other gatherings of veterans. Now, I am happy to say, we have been able to adjust these allowances to conform with current needs. These increases in benefits, restoration of six-monthly indexation, lifting the limits applying to pensioner health benefits and the restoration of full, free medical treatment to veterans who have suffered tuberculosis, plus inclusion of allied veterans into the Australian repatriation system, is evidence for the whole country that this Government has compassion and is very mindful of the needs of the veteran and his dependants. There is no doubt of the obligation which the Australian people still owes our veterans. I hope, **Mr Speaker,** that the new measures announced in the Budget will demonstrate that the Government fully accepts this commitment. {: #subdebate-112-0-s0 .speaker-SH4} ##### Dr KLUGMAN:
Prospect -by leave-The Opposition obviously welcomes the benefits for veterans which to a large extent have been restored by the provisions in the Budget brought down tonight. It is important to emphasise that to a large extent this is a partial restoration of benefits withdrawn by this Government less than one year ago. On 12 October 1978 this House debated amendments to the Repatriation Act. There were four main amendments. They dealt with changes to the pension entitlements of pulmonary tuberculosis sufferers, the abolition of the sustenance allowance, the introduction of yearly instead of six-monthly adjustments to repatriation pensions and the introduction of a means test for certain repatriation pensioners. Nothing has been done about the last point and nothing has been done about the abolition of the sustenance allowance. I cannot think of a word which would accord with parliamentary practice to describe the performance of the Minister for Veterans' Affairs **(Mr Adermann)** and the Government in respect of sufferers of pulmonary tuberculosis. They took from TB sufferers benefits which, in some cases, they had been receiving for many years. These people had to undergo many medical examinations. There must have been tremendous costs as far as medical examinations and administration were concerned. This change upset many people and now the Government has partially reintroduced- I emphasise the word 'partially'the benefits for those TB sufferers. Until last year TB sufferers, provided they were ex-servicemen, did not have to prove that the tuberculosis was due to war service. The persons concerned were in receipt of the 100 per cent benefit. It was, of course, increased as the 100 per cent rate was increased. It was then decided that this would no longer be done. If I remember correctly, they stayed on the 100 per cent rate until such time as they had their examination but they were no longer eligible for medical benefits. They will now become eligible for free medical treatment as far as repatriation is concerned but they still will stay on the frozen 100 per cent rate. That rate does not increase as far as those persons are concerned. I would be interested to hear from the Minister when he presents the appropriate legislation what the cost to the Department was of this completely unnecessary decision last year. I am sure that the cost of medical examinations et cetera was greater than the saving during that year. Veterans, the same as all social security recipients, also have lost one indexation increase. The indexation which should have taken place last May did not take place. Indexation has been reintroduced on a six-monthly basis. It will not cost the Government any extra in November because the November increase was based on the yearly increase anyway. It is completely wrong for the Minister to state in the second last page of his statement, as though it is something new, that the pension increases alone in November 1979 will cost $84m in a full year. That was always the case. That increase of $84m was always to take place. It was the normal indexation increase from the time the Government decided to change from six-monthly indexation to yearly indexation. The eligibility for fringe benefits has been lifted. We certainly welcome that improvement. It is interesting to note the answer I received to my Question on Notice No. 3968. The third part of that question, dealing with income limits and fringe benefits for repatriation pensioners, asks what would these limits be now if they had been updated in accordance with the consumer price index. The Minister tells us that that is what he has done. He has increased those limits to $40 and $68 for single and married pensioners respectively. In the answer to the question he tells us that the new limits ought to be $62.10, not $40, for a single person and $ 108.15, not $68, for a married couple. So much for the honesty of this Government. But 1 suppose that veterans have to be pleased that they got something from the Minister. The Minister referred in his speech to an increase in the allowance for those veterans who have such severe disabilities that they are provided with cars together with an annual allowance. He said: >As honourable members are aware - Very much aware- the cost of maintaining a car has risen considerably in the last few years, and so the Government has decided to increase the annual allowance for this purpose by $48 to a new figure of $480 a year In other words, there has been about a 12 per cent increase. Yet those of us who live in capital cities know that at the beginning of last year petrol was available in Sydney at approximately 13c a litre. Today it costs a minimum of 29c a litre and I understand that a new increase is in the pipeline. It already applies in other States apart from New South Wales and South Australia. There has been an increase from 1 3c to 29c in the cost of petrol since February last year. Yet this Government proposes a 12 per cent increase in the allowance available to those veterans who have such severe disabilities that they have to use a car continuously. I make one point in conclusion and that is to congratulate the Minister on his honesty. In the first paragraph on page six of the speech distributed he said: >Compared with arrangements in other countries with comparable standards of living, the Australian repatriation system is very generous. In his speech he deleted the word 'very'. I am sure that that shows great honesty on the part of the Minister and I congratulate turn. {: .speaker-L1V} ##### Mr Yates: **- Mr Deputy Speaker,** may I have leave to make a statement? {: #subdebate-112-0-s1 .speaker-CI4} ##### Mr DEPUTY SPEAKER (Mr Millar: -Is leave granted? {: .speaker-SH4} ##### Dr Klugman: -- No. {: #subdebate-112-0-s2 .speaker-10000} ##### Mr DEPUTY SPEAKER: -Leave is not granted. {: .speaker-L1V} ##### Mr Yates: **- Mr Deputy Speaker,** I take a point of order. I do not quite understand what has happened. I sought leave to make a speech on behalf of the veterans. Is the honourable member for Prospect **(Dr Klugman)** denying me that right? {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -Order! The Standing Orders state that leave may not be granted if there is a dissentient voice. There was a dissentient voice. The honourable member for Holt was not granted leave. Accordingly, he is required to resume his seat. {: .speaker-L1V} ##### Mr Yates: -- I have not been granted leave by the Opposition and every Returned Services League man will know it. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order! The honourable member for Holt will resume his seat. {: .page-start } page 335 {:#debate-113} ### SOCIAL SECURITY PROGRAMS {:#subdebate-113-0} #### Ministerial Statement {: #subdebate-113-0-s0 .speaker-GH4} ##### Mr HUNT:
Minister for Health · Gwydir · NCP/NP -- by leave- The Treasurer **(Mr Howard),** in his Budget Speech, referred to changes in social security programs. It is appropriate that I elaborate on his statement and provide the House with some additional information. The Treasurer, in his statement of 24 May 1979 in which he announced certain decisions on expenditure and taxation, said: >Against the severity of these cuts there will be attempts to frighten people receiving Commonwealth social security pensions and benefits and repatriation payments. These payments will be maintained by the Government. The fearmongers should be ignored. The Government has maintained social security payments. It has also been able to make some very worthwhile improvements to the social security and welfare system. In particular, we will restore half-yearly indexation of pensions and benefits; extend the income limits for pensioner fringe benefits; extend eligibility for pensioner health benefit cards to supporting parent beneficiaries; provide grants to voluntary agencies providing emergency relief; significantly increase expenditure on services for families and children; and increase the rates of workers compensation for Commonwealth employees. {:#subdebate-113-1} #### Half-Yearly Indexation This year the Government has given very careful consideration to the issue of indexation in the light of present economic and budgetary circumstances and, as the Treasurer announced in his Budget Speech, the Government is pleased to be able to restore twice-yearly indexation. The Government will be introducing legislation to amend the Social Services Act to enable the following payments to be increased automatically in May and November each year in accordance with movements in the consumer price index: Age, invalid and widows' pensions; supporting parents' benefits; wives' pensions; sheltered employment allowances; unemployment benefit for all people aged 18 or over with dependants and for married people aged 16 or 17 years; and sickness benefits for all people aged 1 8 or over and for married persons aged 16 or 17 years. Indexation will not be introduced to cover the following payments: Unemployment benefits for single persons aged 16 or 17 years and for those aged 18 or more without dependants; sickness benefits for single persons aged 16 or 17 years; and age pension paid free of income test to people aged 70 years or more. With the concurrence of honourable members I seek leave to incorporate in *Hansard* a table which sets out the maximum current rates of the basic pensions and benefits together with the maximum rates that will apply from November 1979. Leave granted. *The table read as follows-* {: #subdebate-113-1-s0 .speaker-GH4} ##### Mr HUNT:
NCP/NP -- The Government is also pleased to announce that it will maintain the income test free pension currently payable to those aged 70 or more. The rates are $5 1.45 a week for a single pensioner and $85.80 a week for a married pensioner couple. People in receipt of these pensions may be eligible for a higher rate of payment depending on how much income, excluding pension, they receive. With the concurrence of honourable members I seek leave to incorporate in *Hansard* a table setting out the rates of pensions that will be payable to pensioners 70 years or more as from 8 November 1979. Leave granted. *The table read as follows-* {: .speaker-GH4} ##### Mr HUNT: -I thank the House. {:#subdebate-113-2} #### Fringe Benefit Income Limits One area of great concern to pensioners has been the income test limits for pensioner fringe benefits. Commonwealth fringe benefits available to pensioners holding pensioner health benefit cards include: Access to bulk billing of medical fees; a range of free pharmaceuticals; access to free optometrical consultations and hearing aids; a one-third reduction in telephone rentals; and some reductions in fares on Commonwealth rail and shipping services. In addition, State governments and various private organisations provide assistance to these pensioners. At present a pensioner loses all of these fringe benefits if his private income reaches $33 a week for a single pensioner and $57.50 a week for a married pensioner couple. These amounts are higher where there are children. Whilst it is difficult to calculate the value to the individual pensioner of fringe benefits, it has been suggested that, on average, they could be worth up to about $10 a week. The income limits for fringe benefits have been fixed for some time. Some pensioners have lost entitlement to fringe benefits as a result of increases to their superannuation or war pensions over which they have no control. Accordingly, the Government has decided to increase these limits to $40 a week for a single pensioner and $68 a week for a married pensioner couple. These amounts are higher where there are children. It is estimated that some additional 25,000 pensioners plus 5,000 dependants will qualify for pensioner health benefit cards as a result of these increases. {:#subdebate-113-3} #### Extension of Eligibility for Pensioner Health Benefit Cards to Supporting Parent Beneficiaries For some time the Government has been aware of differences in the treatment of different sole parents. When we came to office, there was no specific assistance available to sole fathers and supporting mother beneficiaries were not eligible for the full range of pensioner fringe benefits- they were not eligible for pensioner health benefits. In 1977 this Government introduced the supporting parents benefit, which replaced the supporting mothers benefit, and extended eligibility for assistance to sole fathers on essentially the same basis as for sole mothers. We have now decided to extend eligibility for pensioner health benefit cards to supporting parent beneficiaries subject to the liberalised pensioner fringe benefit income test outlined above. As a result, Commonwealth fringe benefit assistance for supporting parent beneficiaries will be exactly the same as that for Class A widow pensioners. The rates of assistance are already the same. It is estimated that some 56,000 supporting parent beneficiaries, including 2,500 men, plus 96,000 dependants will qualify for pensioner health benefit cards. As a result their health costs will be reduced significantly. This will be of special importance to those with young children, particularly children suffering from chronic illnesses. Eligibility for fringe benefits provided by State governments and other organisations are generally restricted to holders of pensioner health benefit cards. The extension of these benefits to supporting parent beneficiaries and to pensioners with private incomes between the existing and proposed income limits will, however, be a matter for the States and other responsible bodies. {:#subdebate-113-4} #### Other Income Security Measures The Government has already announced its intention to charge long term hospital patients who are, in effect, nursing home type patients an amount towards their care and accommodation on a similar basis to nursing home patients. This change will not come into effect until the States agree to changes in the hospital cost-sharing agreements. As a consequence of the Government's decision in this area some minor improvements will also be made to provisions under the Social Services Act, namely: The standard rate of pension is to be extended to a woman receiving a wife's pension where the living expenses of a married couple are likely to be greater than they would otherwise be because illness or infirmity prevents them from living together. As a result, in this area a wife pensioner will be treated as if she were a pensioner in her own right. Eligibility for wife's pension is to be extended to a woman who is an inmate of a benevolent home and to a woman who has no child or has not attained SO years of age where her husband is an inmate of a benevolent home. Thus, where either or both of a married couple are inmates of a benevolent home, wife's pension will be payable on the same basis as age or invalid pension. {:#subdebate-113-5} #### Emergency Assistance During the last election the Government made a commitment to provide $500,000 to assist voluntary agencies providing emergency relief. Last year the Australian Council of Social Service and the Department of Social Security were commissioned to prepare a report on emergency relief-giving agencies and their clients. The report of the joint study entitled 'Emergency Relief- A Study of Agencies and Clients' was tabled in the Senate on 29 March 1979. The Government has decided to allocate $500,000 in 1979-80 to assist voluntary agencies providing emergency relief and to provide special assistance to welfare organisations experiencing financial difficulty. In addition, administrative changes have taken place in the Department of Social Security to give immediate assistance by way of special benefit under the Social Services Act to clients suffering hardship. In view of the findings of the joint study, these measures will reduce the burden on voluntary agencies and State welfare administrations. Assistance to the Aged Apart from the payment of pensions, the Government provides assistance for the provision of suitable homes for the aged and disabled and home care services including senior citizens' centres. In addition, the Government provides a personal care subsidy for organisations providing hostel accommodation and a delivered meals subsidy for organisations providing meals-on-wheels services. Total expenditure allocated under the aged or disabled persons homes and aged persons hostels programs is $62.5m in 1979-80. In 1978-79 $52.7m was spent. This year's allocation should enable all approved projects to be completed. Early approval has also been given for funding additional priority projects to the value of $ 1 Om in 1 980-8 1 in order that the necessary forward planning and development of those projects can be completed during 1979-80. In 1979-80 $4m has been allocated for grants towards the costs of senior citizens' centres. In 1978-79 $3m was spent. A joint Commonwealth-State announcement on the new projects to be funded will be made as soon as State governments confirm their priority lists. Spending under other pans of the home care services program will also increase from $822,000 to $1,128,000 for grants towards salaries of welfare officers and from $8,586,000 to $9,255,000 on grants towards costs of home care services. These increases follow on a large increase in total Commonwealth expenditure on home care services last year. Assistance for the Handicapped Apart from the payment of invalid pensions, sheltered employment allowances, sickness benefits and handicapped child 's allowance paid under the Social Services Act, the Government assists handicapped people under the Handicapped Persons Assistance Act by way of grants to eligible organisations to establish and operate sheltered workshops, activity therapy and training centres and residential accommodation for handicapped children and adults. In addition, the Government provides rehabilitation treatment and training through the Commonwealth Rehabilitation Service. Expenditure under the handicapped persons welfare program will total $30.3m in 1979-80. Approval will also be given to new projects during the financial year, some of which will be completed during 1979-80. Additionally, new projects will be approved this financial year in order that planning can be undertaken to enable funding in 1980-81. Expenditure by the Commonwealth Rehabilitation Service will rise from $ 17.3m to $ 19.2m in 1979-80. This rise follows the expansion of rehabilitation services to Townsville, Hobart and Darwin together with the effects of the widened eligibility criteria announced by the Government in 1977. Assistance for the Homeless Expenditure under the homeless persons assistance program will increase from $2,781,000 to $5,640,000 in 1979-80. The higher expenditure reflects progress on construction of two major centres in Brisbane. At 30 June 1979, 1 13 other centres catering for homeless persons were receiving recurrent assistance. The Government has also decided to extend the principal Act to permit continued rental subsidies. {:#subdebate-113-6} #### Children's Services In addition to the payment of universal family allowances, double orphans pension and handicapped child's allowance and additional payments for the children of pensioners and beneficiaries, the Government provides under its children's services program financial assistance to community organisations, local government bodies and the States for a range of care services for children under 18 years and services to support their families. A block grant is also made to the States and the Northern Territory for preschools. Total expenditure under the children's services program will rise from $63,786,000 to $69,220,000 in 1979-80. Grants for services for families and children will rise by $5,094,000 to $36,130,000. Particular types of services funded include day-care, emergency outside school hours and vacation care. The Government has also given priority to expansion of services in these areas. An announcement will be made in the near future of new projects to be funded under the children's services program and on special grants to mark the International Year of the Child. The Fraser Government has more than doubled assistance on child care and other related services from $ 16.9m in 1975-76 to $36. 13m in the present Budget. Assistance to the States for preschool education will be maintained. A total of $32.75m will be provided this year. For the first time assistance of $340,000 will be provided for pre-schools in the Northern Territory. {:#subdebate-113-7} #### Pilot Programs The welfare rights program provided funds for the appointment of welfare rights officers to work with organisations associated with disadvantaged minority groups within the community. Ten organisations received grants during the pilot period of the program and these will now be funded within other Commonwealth programs. The community information centre program was a pilot program to evaluate means of providing community information and referral services to assist people to make use of the full range of welfare services and facilities offered by the community. The pilot program has now been completed. The centres will be funded within existing programs. Assistance for Research and Welfare Co-ordination The Social Welfare Research Centre at the University of New South Wales will become operational during this year. A sum of $300,000 has been provided for the centre's operation in 1 979-80. There has also been an expansion in the Budget of the social welfare policy secretariat from $424,000 to $564,000. Total allocations to national social welfare co-ordinating organisations have been increased. The Australian Council of Social Service, the Australian Council for Rehabilitation of Disabled and the Australian Council on the Ageing have had their basic Commonwealth Grants increased by $10,000 to $160,000. In addition, the Australian Pre-School Association will receive $50,000, together with an additional sum for coordinating the activities of Lady Gowrie centres. {:#subdebate-113-8} #### Compensation Rates for Commonwealth Government Employees The Government has decided to increase, from 1 September 1979, the rates of workers compensation payable to Commonwealth employees by about12½ percent. I seek leave to incorporate in *Hansard* a table which sets out the existing and proposed rates. Leave granted. *The table read as follows:* {: #subdebate-113-8-s0 .speaker-GH4} ##### Mr HUNT:
NCP/NP **- Mr Acting Speaker,** this is a highly responsible package. Despite the need to restrain public expenditure the Government has been able significantly to improve benefits available to the needy members of the community. This is a compassionate Budget. The Fraser Government has continued to give a high priority to income security and social welfare. I am sure the Government's approach will be endorsed by all Australians. {: #subdebate-113-8-s1 .speaker-SH4} ##### Dr KLUGMAN:
Prospect -by leave-As these new measures announced by the Minister for Health **(Mr Hunt)** on behalf of the Minister for Social Security **(Senator Guilfoyle)** improve benefits for social beneficiaries they receive the support of the Opposition. However, it is important to look at these new measures in the context of the Budget and I will make a couple of points concerning them. There has been a very sharp increase in revenue in this Budget. It has risen in total by 15.4 per cent in money terms. Even with the 10 per cent inflation rate that is a very significant increase in revenue. On the expenditure side of the Budget there is in fact a loss of about one per cent in real terms. Obviously this does not apply only to the question of social security. However, it is important to point out to the people of Australia that income tax from payasyouearn and other sources- income tax collected from individuals, in other words- will increase to about $15.1 billion in this financial year. It is in increase of 1 8.2 per cent in nominal terms or, taking a 10 per cent inflation rate, an increase of about 8 per cent cent in real terms. The effect is to raise personal income taxes as a proportion of total revenue from 50 per cent approximately last year to 51.3 per cent in this coming year, in spite of the fact that there has been an increase of $800m already in the socalled crude oil levy. Not only has the Government failed to reduce taxes but also it has actually increased the importance of income taxes. I think it is an important point to emphasise continually that this Government, certainly in 1975, and I think to a large extent in 1977, came into power on the basis that it would reduce taxation. It is important to remember that this Government now has a highest point ever of $15.1 billion collection of income tax. The total taxes and charges in this financial year are up to $27,000m, or a 54 per cent increase in revenue since this Government took office. This is background information for this House in looking at the increased benefits which have been announced tonight. I think it is also important to remember that one of the major so-called increased benefits is really a restoration- I emphasise that- of 6- monthly indexation. This restoration has become necessary because last October this Government changed from 6-monthly indexation to yearly indexation. Therefore, all social security recipients who were covered by indexation in fact lost out on one indexation stage. The second point to remember is that many of the other benefits that were removed last year have not been restored. I refer to such things as the introduction of a means test upon increased age pensions for those over 70. That has not been changed. Their pension remains as it was; there has been no restoration of the provision for increases. There has been no indexation of the family allowance. That is probably one of the worst features of the whole Budget. If we examine the family allowance- and I was a strong supporter of its introduction in place of the tax rebates and child endowment which had obtained for many years- we find that the loss in benefits to a taxpaying family in respect of their first child has become $2.70 a week; in respect of a family with two children it has become $4.42 a week. For a family with three children it has become $6.10 a week; for one with four children it has become $8 a week; and for one with six children it has become $10.50 a week. These very, very significant losses to those families have resulted from the failure to index the family allowances. Again, in respect of fringe benefits there has been a partial attempt at indexation, but I repeat what I said a few minutes ago with respect to repatriation pensioners, because exactly the same figures apply. The new weekly figures in respect of fringe benefits will be $40 for single persons and $68 for married couples, when they should be $62.10 for single persons and $108.15 for married couples. Those figures indicate the very large difference between what should have been done by this Government and what has in fact been done by it. A moment ago the Minister for Health said that he was pleased to be able to announce the restoration of six-monthly indexation. Let us look at what the Treasurer **(Mr Howard)** said about an hour ago at page 9 of his Budget Speech. He did not say that he was pleased to be able to restore indexation in respect of pensions and benefits. He said: >Last year when the Government took its decision to introduce annual indexation adjustments of social security and repatriation pensions and benefits, it was with the prospect of a lower rate of inflation than now prevails. > >In the event this expectation was not realised. > >Following many representations to the Government, it has been decided to restore twice yearly automatic indexation for all indexed pensions and benefits. So the Treasurer does not pretend that he is pleased to be able to restore these benefits. He is sorry that he has to do so because his economic policy has failed, as far as inflation is concerned. The only argument that the Fraser Government had was that during the last few years inflation had in fact improved, but now inflation is increasing continually and quite significantly. What the Government has had to do today has been forced upon it because inflation has again been getting out of control. A few minutes ago the Minister for Health was given leave to incorporate in *Hansard* tables showing what the benefits, in two cases, would be as from November 1979. He was terribly proud of this and took credit for it, as if it were a new benefit. Let us remember that it is not. It is the November increase. The figure looks impressive. Last year the Government removed sixmonthly indexation and, as a result of its restoration, the increase in benefits now looks quite large. Instead of two six-monthly benefits we have had a single 12-monthly benefit, with very high inflation rates in between. On the question of unemployment and sickness benefits, I make the following point: Tonight in the Budget Speech it was announced that pharmaceutical benefits will be increased from $2.50 to $2.75. The patient contribution will be increased by only a relatively small amount- 10 per cent. But unemployment and sickness beneficiaries do not receive pensioner health benefit cards for pharmaceuticals. They are in a very difficult position in many cases, especially those who are in receipt of sickness benefits. As far as medical services are concerned, they can be treated by doctors as disadvantaged persons but, as far as pharmaceuticals prescribed by those doctors are concerned, they have to pay $2.75 for each prescription. That is a large amount of money for a person who is receiving only a small amount. I appeal to the Government- I know that it has had many representations, not only from individuals and from our side of the House but also from The Pharmacy Guild of Australia- to try to do something for recipients of social security benefits who are not able to get pensioner health benefit cards and are therefore unable to get free pharmaceuticals. Special benefits are not mentioned with unemployment and sickness benefits. Usually they are mentioned. Does that mean that they are not being increased or is it just an oversight on the part of the Government? Special benefits are often the most important benefits. They go to the people who need them the most. It is important to realise that the single pension is now reduced to 22.8 per cent of average weekly earnings. Under the Labor Government it was 25 per cent of average weekly earnings. {: .speaker-2E4} ##### Mr Lloyd: -- It never got to 25 per cent. {: .speaker-SH4} ##### Dr KLUGMAN: -I beg your pardon? {: .speaker-2E4} ##### Mr Lloyd: -- We got to a higher percentage than you ever got to. {: .speaker-SH4} ##### Dr KLUGMAN: -The Government may well have got to it, but the pension is now down to 22.8 per cent. I am not suggesting that this Government is not on the way down; I think it is. The unemployment benefit for a single person is now down to 22.1 per cent. In the case of those under the age of 1 8, the amount is much less than that. It has been kept at $36 a week ever since 1975. In March this year there were 261,510 single unemployed people without dependants. Their benefit is being held down, not increased. This figure represents 77.7 per cent of all the unemployed on whom the Government is spending money. It is spending no extra money on them. There are 58,200 unemployed people who have been on the benefit for one year or longer. We do not know their ages, but those people- over 58,000 of them- have not been able to get a job for over a year. Of all unemployment beneficiaries, 96.9 per cent- nearly 97 per centhad no regular income other than the unemployment benefit. Over 57 per cent of the unemployed over 45 years of age have been on the benefit for six months or longer. I feel very strongly-I have made this point in the House before- that whilst we pay a lot of Up service, and maybe more than Up service, to the young who are unemployed, and whilst it is extremely unpleasant to be young and unemployed, it is worse to be old and unemployed or middle aged and unemployed. Some people may argue about this. I suppose it is a question of attitudes. I think it must be very unpleasant for a person who is 16 or 18 years of age and has left school to be unemployed, and obviously we do not want that person to be unemployed, but at least that person has a whole life in front of him or her and has a good chance of picking up a job sooner or later. A person who is in his, or very often her, 40s, who is 45 or 50 years of age, and who has been unemployed for three or six months and does not see the possibility of a job coming up, who has lots of responsibility and a family to look after and so on would become really desperate. This Government and people connected with social security and employment creation schemes are continuously talking about getting jobs for the young unemployed. I think it is more important to get jobs for the old unemployed or the middle aged unemployed. If all we are doing is putting young people into jobs and displacing older people from those jobs, we are not doing something for the benefit of society. I do not think we are doing the right thing as far as people who most need benefits are concerned. I do not support the proposition that the unemployment benefit for those under 18 years of age should have been held at $36 but, after all, they turn 1 8 reasonably soon. They then go on to a higher rate of unemployment benefit. I find very depressing the thought that persons are missing out on a job for the first six months or the first year of what would have been their working life. I would not like to be one of them and I would not like one of my children to be one of them. I do think that it is easier for them when they are still living with their families, to a large extent, than it is for those who are already responsible and who must feel terribly depressed when they have that responsibility to their family and are not able to get a job. It struck me as an anomaly, as I was listening to the Minister talking about the expansion of the Budget and the Social Welfare Policy Secretariat, that we have an increase in the Budget of 33 per cent. That is a 33 per cent increase in the budget of the Social Welfare Policy Secretariat. It may very well be justified. It probably is. The Minister then went on to talk about allocations to national social welfare co-ordinating organisations such as the Australian Council of Social Service, the Australian Council for Rehabilitation of Disabled and the Australian Council on the Ageing. The amount of money going to those organisations has been increased by only 6V4 per cent. I think it is wrong. They are voluntary organisations run by people, to a large extent, who are doing this part time and who need the money, not so much for themselves for salaries but to keep the organisations going. They do quite a significant amount of good work in the community, whether it is ACOSS, the Council for Rehabilitation or the Council on the Ageing. Their actual amount in real terms has been reduced because it has been increased from $150,000 to only $160,000 a year. Yet the amount of money going to the Social Welfare Policy Secretariat, a part of the Government's bureaucracy, has been increased by 33 per cent at the same time. I commend the changes, as far as they go, that have been announced tonight as far as the social welfare policies are concerned. We have had the benefit of the speech for only about an hour or an hour and a half. Obviously one has to go into greater detail to make more detailed comments on it. There will undoubtedly be legislation introduced dealing with some of the changes that are proposed. We will then have a further opportunity to debate these changes and possibly make further comments on them. I summarise again my point. This is a high taxation Government. Taxation rates are being increased. Income tax is being increased this year by 18.2 per cent and yet expenditure on very important benefits is not being increased by anything like that amount. {: .page-start } page 341 {:#debate-114} ### SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) AMENDMENT BILL (No. 3) 1979 Bill presented by **Mr MacKellar,** and read a first time. {:#subdebate-114-0} #### Second Reading {: #subdebate-114-0-s0 .speaker-0I4} ##### Mr MacKELLAR:
Minister for Immigration and Ethnic Affairs and Minister Assisting the Treasurer · Warringah · LP -- I move: This Bill will amend the Sales Tax (Exemptions and Classifications) Act to provide certain new exemptions that are included in the Budget proposals and to give effect to the sales tax measures announced in the statement of the Prime Minister **(Mr Malcolm Fraser)** of 27 June detailing the Government's energy policy. The new exemptions relate to goods for use by blind or deaf persons, to antiques and to player piano rolls. The sales tax law now provides exemption for specified types of goods used by blind or deaf persons. However, technological advances often bring forth new aids and appliances for the blind and deaf. Because of the specific terms of the present exemption, these new devices are, in the main, taxable at 15 per cent. The amendment now proposed will provide an exemption of a general nature for goods designed and manufactured expressly for use by blind persons or deaf persons and which are not of a kind ordinarily used by persons who do not suffer from these disabilities. New devices in this category will in future automatically qualify for exemption without the need for legislative amendments. Exemption is also being provided for imported antiques, that is, goods which are more than 100 years old. Australian antiques are not subject to sales tax and imported works of art are generally exempt also. The new exemption for other imported antiques puts them on an equal footing with Australian antiques and imported works of art. A further exemption in the Bill will apply to player piano rolls, which are now taxable at 15 per cent. These are currently manufactured by only a few companies in the world, one of which is in Australia. This company undertakes valuable work in preserving the works and playing styles of many great pianists. This new exemption will assist this highly specialised activity .The exemptions for goods for use by blind or deaf persons and for imported antiques and player piano rolls will apply from tomorrow, 22 August 1979. Turning to the exemptions relating to the Government's energy policy, these sales tax measures are aimed at assisting the fulfilment of the objective of encouraging conservation of scarce sources of energy- in particular, liquid fuels other than liquefied petroleum gas- and promoting the use of alternative energy such as natural gas, LPG, coal-based electricity and solar energy. The provisions in the amending Bill which will give effect to that policy in the sales tax area will exempt goods for use in the conversion of internal combustion engines to liquefied petroleum gas or natural gas operation, non-oil burning domestic space heating appliances and various solar energy appliances. These exemptions are to have effect on and from 28 June 1979, the day after the announcement of the Prime Minister **(Mr Malcolm Fraser).** As compressed natural gas is emerging as an alternative motor vehicle fuel, it is proposed that the exemption for engine conversion kits apply to goods for use in conversions to natural gas as well as to conversions to LPG. It will also apply to goods for use in converting marine engines or stationary engines to LPG or CNG operation. Domestic space heating appliances of the built-in type are largely exempt from sales tax under the existing law. Portable domestic heating appliances are taxable at 2.5 per cent. The exemption for non-oil burning domestic space heating appliances will apply mainly to portable domestic space heaters, other than kerosene heaters. It will not apply to household air conditioners. These and household kerosene heaters will remain taxable at 2.5 per cent. Solar energy is rapidly becoming an alternative energy source, particularly for water heating systems. Household water heating and hot water systems of the fixture type, including solar water heaters, are already exempt from sales tax. The new exemption for solar energy equipment will apply to devices such as solar collectors, absorbers and concentrators which are essential to the effective use of the sun as a source of heat energy, and to photovoltaic cells which convert solar energy to electricity. Thus solar collectors, absorbers and concentrators which are for use in industrial installations or in heating water for swimming pools will be covered by the exemption. The provisions of the Bill are explained in more detail in an explanatory memorandum which is being circulated for the information of honourable members. I commend the Bill to the House. Debate (on motion by **Dr Everingham)** adjourned. {: .page-start } page 342 {:#debate-115} ### NOTICES The following notices were given: **Mr Howard** to present a Bill for an Act to amend the Local Government (Personal Income Tax Sharing) Act 1976. **Mr MacKellar** to present a Bill for an Act to amend the Migration Act 1958. **Mr Fife** to present a Bill for an Act to amend the Nitrogenous Fertilizers Subsidy Act 1 966. **Mr Hunt** to present a Bill for an Act to amend section 84 of the National Health Act 1953. **Mr Nixon** to present a Bill for an Act to amend the States Grants (Roads) Act 1977, and for related purposes. **Mr Eric** Robinson to present a Bill for an Act to authorise the borrowing and expending of moneys for defence purposes. House adjourned at 10.15 p.m. {: .page-start } page 343 {:#debate-116} ### ANSWERS TO QUESTIONS The following answers to questions were circulated: {:#subdebate-116-0} #### Judges: Sitting Days (Question No. 1948) {: #subdebate-116-0-s0 .speaker-2V4} ##### Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP asked the Minister representing the Attorney-General, upon notice, on 13 September 1978: >On how many sitting days did each Justice of the (a) High Court, (b) Federal Court of Australia, (c) Supreme Courts of (i) the Australian Capital Territory and (ii) the Northern Territory and (d) Family Court of Australia sit during (A) 1976 and (B) 1977. {: #subdebate-116-0-s1 .speaker-EE6} ##### Mr Viner:
LP -- The Attorney-General has provided the following answer to the honourable member's question after making inquiries from the Registries of the Courts concerned: {: type="a" start="d"} 0. ) Family Court of Australia- There are 38 Judges of the Family Court of Australia of whom 13 (including the Chief Judge) are in New South Wales, 10 in Victoria, 6 in Queensland, 5 in South Australia and 2 each in Tasmania and the Australian Capital Territory. There are no Family Court Judges resident in the Northern Territory and none in Western Australia, which has its own Family Court. Information sought by the honourable member concerning the number of days on which each Judge of the Family Court of Australia sat is not readily available. A full reply would require an examination to be made of the records of each registry of the Court for each of the years mentioned. In view of the work that would be involved and the commitments of officers engaged in the business of the Courts, which is heavily pressed, I do not consider it justifiable at this point of time to detach officers from their normal duties for this purpose. The Chief Judge has, however, recently had compiled information relating to the period 1 February-3 1 May 1 979 inclusive from which it would appear that each Judge would, on the average, sit on 197.5 days in a year. That figure would include Full Court sittings and single Judge sittings. {:#subdebate-116-1} #### Mass Media Communication: Research Programs (Question No. 3208) {: #subdebate-116-1-s0 .speaker-K9M} ##### Mr Les Johnson:
HUGHES, NEW SOUTH WALES · ALP asked the Minister for Post and Telecommunications, upon notice, on 20 February 1979: >What research programs into the effects of mass media communication on Australian society (a) have been funded by the Australian Government during the periods (i) 1975-76, (ii) 1976-77, (iii) 1977-78 and (iv) 1 July 1978 to date, and (b) are currently under consideration for funding. {: #subdebate-116-1-s1 .speaker-GY5} ##### Mr Staley:
LP -- The answer to the honourable member's question is as follows: {: type="a" start="a"} 0. My Department has not funded any research programs into the effects of mass media communication on Australian society during the periods mentioned. It has, however, commissioned the following surveys: Ethnic Radio Stations 2EA and 3EA. Survey of Greek, Italian and Turkish Communities, Sydney and Melbourne. McNair Surveys Pty Ltd, August 1 975. Penetration of FM Radio Receivers, Postal and Telecommunications Department, May 1978. Penetration of Television Sets with Built-in UHF Capability, May 1978. The Australian Broadcasting Control Board (ABCB) and the Australian Broadcasting Tribunal (ABT) has carried the following research since 1975: ABCB 1 975- 76-' Attitudes to Television ' Field Survey in Melbourne, covering the topics of satisfaction with television control of broadcasting and other specific areas. Attitudes to Advertising on the ABC ' Telephone Survey of Vie wers ' Panel. (The Viewers' Panel is a group of persons recruited during field surveys, who are available to give their opinions on broadcasting). ABT 1976- 77-'Television and the Public' Mail Survey of Viewers' Panel. This covered children's television, Australian content, advertising and topics of relevance to the SelfRegulation Inquiry in progress at the time. 1 977- 78-'Television and Children ' A survey of 400 children and their parents in four major capital cities. The survey concerned parental knowledge and control of children's viewing habits. The report is being printed. Television and The Public- The News' Public opinion of television news, Sydney 1978. The report is near to publication. 1978- 79- 'Expectations of Broadcasting in the Rural Community'. Three surveys in rural areas aimed at investigating the extent of satisfaction with broadcasting. The first stage in Ayr, North Queensland has been conducted. The other two (in Leeton, NSW and the Pilbara, WA) have been postponed due to financial considerations. No research by other organisations has been funded during this period by either the ABCB or the ABT. {:#subdebate-116-2} #### Quarantine: Exotic Pests (Question No. 3228) {: #subdebate-116-2-s0 .speaker-CV4} ##### Mr Jacobi:
HAWKER, SOUTH AUSTRALIA asked the Minister for Health, upon notice, on 2 1 February 1 979: >Further to his answer to question No. 1214 part (4) *(Hansard,* 12 September 1978, page 887), what was the result of his Department's investigation. {: #subdebate-116-2-s1 .speaker-GH4} ##### Mr Hunt:
NCP/NP -- The answer to the honourable member's question is as follows: >The investigation is still continuing and is not expected to be concluded for some time yet. {:#subdebate-116-3} #### Yeelirrie Uranium Deposit (Question No. 3249) {: #subdebate-116-3-s0 .speaker-CV4} ##### Mr Jacobi: asked the Treasurer, upon notice, on 22Feburary 1979: >Has the Government approved Esso's purchase of 15 per cent interest in the Yeelirrie uranium deposit from Western Mining Corporation; if so, why. {: #subdebate-116-3-s1 .speaker-ZD4} ##### Mr Howard:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. 1 ) Yes. As outlined in my statement of 1 0 June 1 979, the Government has given foreign investment approval to the joint venture arrangements for the development of the Yeelirrie uranium project by Western Mining Corporation Ltd, Esso Exploration and Production Australia Inc and Urangesellschaft Australia Pry Ltd. {: type="1" start="2"} 0. In reaching its decision to allow Esso to take up an equity interest in the project, the Government had regard to the substantial marketing, technological and financial assistance which the company would bring to the project. The Government was also satisfied that alternative Australian capital was not available. {:#subdebate-116-4} #### Methadone (Question No. 3275) {: #subdebate-116-4-s0 .speaker-SH4} ##### Dr Klugman: asked the Minister for Health, upon notice, on 28 February 1 979: {: type="1" start="1"} 0. Is it a fact as reported in the ACT Legislative Assembly *Hansard,* 19 February 1979, page 120, that (a) the amount of methadone prescribed in the ACT has increased from 24,500 mg during the 4 weeks ending 8 October 1977 to 154,200 mg for the 4 weeks ending 7 October 1978 and (b) this has been a steady, steep and almost linear increase. 1. 2 ) If so, what is the explanation for this increase. {: #subdebate-116-4-s1 .speaker-GH4} ##### Mr Hunt:
NCP/NP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. (a) and (b) The figures quoted by the honourable member are the amounts of methadone supplied at the wholesale level to hospitals and pharmacies in the ACT during the two four-weekly periods mentioned. However, following the introduction of the Poisons and Narcotic Drugs Ordinance 1978 (with effect from 29 December 1978) which provides the Capital Territory Health Commission with powers to strictly control the supply, processing, prescribing and administration of addictive drugs, the supply of methadone at the wholesale level in the ACT has drastically reduced. As an indication, for the four-week period ended 24 February 1979 the total amount of methadone made available at a wholesale level in the ACT was 6,000 mgs. This compares with the figure of 154,200 mgs for the four-week period ended 7 October 1978. 1. Until the introduction of the Poisons and Narcotic Drugs Ordinance, detailed records of the purpose for which methadone was prescribed in the ACT were not kept by the Capital Territory Health Commission. However, the Commission's view is that the high level of demand was the result of an increase in methadone prescriptions for the treatment of heroin addiction. Since the introduction of the Poisons and Narcotic Drugs Ordinance, the Commission has maintained records of long-term prescription of methadone. These records show that the bulk of methadone prescribed is for the treatment of disabling pain associated with malignant neoplasia or self-limiting disorders of short duration not responding to non-narcotic analgesics. {:#subdebate-116-5} #### Telephone Subscribers (Question No. 3339) {: #subdebate-116-5-s0 .speaker-AF4} ##### Mr EWEN CAMERON:
INDI, VICTORIA · LP asked the Minister for Post and Telecommunications, upon notice, on 1 March 1979: {: type="1" start="1"} 0. 1 ) Which cities are regarded as metropolitan for telephone purposes. 1. How many subscribers expressed as a percentage of the population were there in each of these metropolitan centres during (a) 1976-77 and (b) 1 July 1978 to date. 2. How many subscribers expressed as a percentage of the population were there in (a) Albany, (b) AlburyWodonga, (c) Ballarat, (d) Bendigo, (e) Geelong, (f) Hamilton, (g) Tamworth, (h) Townsville and (j) Wagga Wagga, during (i) 1 976-77 and (ii) 1 July 1 978 to date. 3. How many trunk/STD calls were made both ways between each metropolitan centre and each of the provincial centres referred to in pan (3) during 1976-77 and what was the call revenue in each case. 4. What proportion of this revenue was derived from (a) business subscribers and ( b) domestic subscribers. 5. What was the average duration of calls referred to in part (4). 6. During 1976-77, what proportion of trunk/STD and local calls (a) to and (b) from the provincial centres referred to in pan (3) were within 100 km. 7. How are the charge fee distances listed by Telecom established and do they relate to the nearest boundary of the directory area or local call zone from exchange to exchange. {: #subdebate-116-5-s1 .speaker-GY5} ##### Mr Staley:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. Sydney, Melbourne, Brisbane, Adelaide, Perth and Hobart. 1. and (3) The boundaries used by the Australian Bureau of Statistics and Telecom exchange area boundaries do not coincide. Precise answers to these parts of the question are therefore not practicable but the percentages shown are Telecom 's best estimates of the information sought. {: type="1" start="5"} 0. Precise details are not recorded but a sample indicates that the proportion of total call revenue derived from business subscribers and non-business subscribers would be of the order of: Metropolitan/ELSA Ratio business to Non-business = 6.3:1 Country/ELSA Ratio business to Non-business = 2.7: 1 {: type="1" start="6"} 0. Charges for telephone calls are based on a group charging scheme whereby exchanges are grouped into zones which in turn are grouped to form charging districts. Local call access is available between exchanges in the same or adjoining zones while trunk rates apply on all other calls. Charges for trunk calls are based on the radial distance between zone centres if both zones are in the same adjoining districts, and on the distance between district centres if the district boundaries do not adjoin. {:#subdebate-116-6} #### Immigration: Assisted Passages (Question No. 3365) {: #subdebate-116-6-s0 .speaker-K9M} ##### Mr Les Johnson:
HUGHES, NEW SOUTH WALES · ALP asked the Minister for Immigration and Ethnic Affairs, upon notice, on 7 March 1979: {: type="1" start="1"} 0. 1 ) How many assisted passages were granted to migrants who were last resident in (a) the United Kingdom, (b) New Zealand, (c) South Africa, (d) Lebanon, (e) Turkey, (f) Greece, (g) Italy, (h) Spain, (j) Portugal, (k) Chile, (1) India, (m) Thailand, (n) the Philippines, (o) the United States of America, and (p) Canada during (i) 1975, (ii) 1976; (iii) 1977,(iv) 1978 and(v) 1979 to date. 1. What were the (a) nationalities and (b) professional or other trade qualifications of those migrants granted assistance. 2. What percentage of applicants from these countries were refused assisted passage to Australia. {: #subdebate-116-6-s1 .speaker-0I4} ##### Mr MacKellar:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. The following table gives the number of migrants granted assisted passage in their respective countries of last residence by year of arrival: {: type="a" start="a"} 0. Includes assisted settler arrivals from Ireland. Separate figures for the United Kingdom are not available until 1977. These statistics are based on information entered on the Incoming Passenger Cards by migrants on arrival in Australia. A large proportion of migrants describe their country of last residence as Ireland- which could include the Republic of Ireland and Northern Ireland. {: type="a" start="b"} 0. Assisted migration from Greece ceased in 1973 when Australia withdrew its membership of the Intergovernmental Committee for European Migration (ICEM), partly because the Greek Government wished Australia to continue using ICEM 's facilities and partly because of objections to increases in the migrant contribution rate. The assisted arrivals in 1975, 1976 and 1977 who stated that their country of last residence was Greece would have been granted assisted passage in a country other than Greece. {: type="a" start="1"} 0. a) Includes both Democratic and Federal Republics of Germany. It is not possible to differentiate arrivals from the German Democratic Republic and Federal Republic of Germany. The statistics are based on Passenger Cards filled out by travellers on arrival in Australia, and on these a large proportion of settlers describe themselves simply as German citizens. 1. b ) Greek citizens who were granted assisted passage in a country other than Greece. {: type="1" start="1"} 0. 2 ) ( b ) Occupational classification of assisted migrants by year of arrival: {: type="1" start="3"} 0. Statistics on the number of persons who applied for and were refused assisted passage are not available. Since mid- 1978 assisted passages have been available only to refugees and skilled workers and their dependants. {:#subdebate-116-7} #### Energy Research Projects (Question No. 3375) {: #subdebate-116-7-s0 .speaker-RK4} ##### Mr Hayden: asked the Minister for National Development, upon notice, on 7 March 1979: >Which energy research projects funded by the Government during 1978-79 will primarily investigate (a) means of conserving liquid fuels, (b) economic aspects of energy use, (c) social aspects of energy use and (d) environmental aspects of energy production, transport and use. {: #subdebate-116-7-s1 .speaker-JVV} ##### Mr Newman:
LP -- The answer to the honourable member's question is as follows: >On 2 May 1979I released a list of 178 projects approved for support under the 1 978-79 National Energy Research, Development and Demonstration Program. The information requested in (a), (b), (c) and (d) can be obtained from an examination of this document. {:#subdebate-116-8} #### Defence Equipment Procurement Orders (Question No. 3381) {: #subdebate-116-8-s0 .speaker-5J4} ##### Mr Scholes: asked the Minister for Defence, upon notice, on 7 March 1979: {: type="1" start="1"} 0. 1 ) What capital defence equipment items have been the subject of firm procurement orders placed since 1 January 1976. 1. With which firms were orders placed. 2. What was the project cost at the time of placing the order. 3. What is the estimated cost in each case at 1 January 1979. {: #subdebate-116-8-s1 .speaker-4U4} ##### Mr Killen:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. to (3) Columns 2, 3 and 4 of the table below show respectively: {: type="a" start="a"} 0. the major capital equipment items subject to firm procurement orders since 1 January 1976; 1. the firms with which the major orders were placed; and 2. the project approval at the time of placing the order. It should be noted that the project approval is not the same as the price for the major equipment contract as it includes the cost of initial spares, training, capital works and other associated aspects. 1. The feasibility of providing project cost estimates as at 1 January 1979 has been examined. As this is not a normal review procedure, it could only be done at the expense of an extremely large administrative effort by my Department. For this reason, column 5 of the table shows the current amount approved for the project and the price basis of the approval. In this regard it should be noted that whilst the relationship between commitment/expenditure and the current amount approved is under constant surveillance, variations are only sought as and when required. It should also be noted that amounts approved are based on price levels at about the time of approval and increases frequently reflect only price escalation and exchange rate fluctuations. {:#subdebate-116-9} #### Chinese Trade Arrangements (Question No. 3389) {: #subdebate-116-9-s0 .speaker-JTS} ##### Mr Kevin Cairns: asked the Minister for Trade and Resources, upon notice, on 7 March 1979: {: type="1" start="1"} 0. 1 ) Has his attention been drawn to the statements made by Chinese Vice Premier Madame Chen Muhua at the National Press Club that China's trade in its modernisation program will follow practices such as (a) compensatory payments, which she defined as being payments with the products of the enterprises and (b) delaying payments for equipment. 1. If so, will he and the Minister for Foreign Affairs issue guidelines on these new principles of international trade, governing (a) the items of trade acceptable as compensatory payments (b) the prices of products traded in this way as compared with normal multilateral trade and (c) the effects on Australia 's foreign policy of these new arrangements. {: #subdebate-116-9-s1 .speaker-BU4} ##### Mr Anthony:
NCP/NP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. Yes. 1. The Treasurer has provided the following information on exchange control policy as it would be applicable to the payment for Australian exports by way of deferred payments or compensatory payments. Where payments fur exports from Australia are to be paid for by any method other than that notified in *Gazette* No. S286 on 20 December 1978, the specific authority of the Reserve Bank is required for the export, in accordance with regulation 16(1) (b) of the Banking (Foreign Exchange) Regulations. Specific authority would also be required for payments for any imports involved in compensatory trade, where payment is to be made more than one month before expected date of arrival of the imports, upon earlier shipment, or more than six months after arrival of the imports. The Banking (Foreign Exchange) Regulations do not prescribe the arrangements acceptable for barter or compensatory payments. Exchange control policy is that each application for compensatory payment is considered on its merits; as regards prices, it would be expected that normal commercial criteria would apply to both sides of the transaction; and the value of exports would need to be consistent with the definition of 'export value ' as set out in regulation 15 of the Banking ( Foreign Exchange ) Regulations '. {:#subdebate-116-10} #### Australian Broadcasting Commission Staff Levels (Question No. 3390) {: #subdebate-116-10-s0 .speaker-SD4} ##### Mr Cadman:
MITCHELL, NEW SOUTH WALES asked the Minister for Post and Telecommunications, upon notice, on 7 March 1979: >What are the staff levels in all Australian Broadcasting Commission facilities in the Sydney area by (a) function not by designation and (b) designation not by function. {: #subdebate-116-10-s1 .speaker-GY5} ##### Mr Staley:
LP -- The answer to the honourable member's question is as follows: {: type="a" start="a"} 0. The staff levels in all Australian Broadcasting Commission facilities in the Sydney area are as follows: {:#subdebate-116-11} #### Public Service Superannuation Fund Surplus (Question No. 3405) {: #subdebate-116-11-s0 .speaker-JXQ} ##### Mr Fry: asked the Minister for Finance, upon notice, on 8 March 1979: {: type="1" start="1"} 0. 1 ) With regard to the distribution of surplus funds to contributors of the Australian Public Service Superannuation Fund following the changeover to the new fund on 1 July 1 976, is it a fact that the basic contributions allocated to contributors was less than actual contributions paid by them into the Fund; if so, why. 1. How was the surplus, which would have accrued from interest earnings on contributors' funds, dealt with to ensure that all contributions received equitable treatment. {: #subdebate-116-11-s1 .speaker-KZL} ##### Mr ERIC ROBINSON:
MCPHERSON, QUEENSLAND · LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. 1 ) In the majority of cases, the amounts of basic contributions allocated to contributors to the old pension scheme in the allocation of the old Superannuation Fund as at 30 June 1976 were less than the contributions actually paid by those contributors. In other cases, including contributors to the old Provident Account, basic contributions exceeded the contributions paid. In no case, however, was the total allocation to a former pension scheme contributor, that is basic and supplementary contributions combined, less than the contributions paid, this being a condition of the arrangements approved by the Government. The predominant reason for basic contributions of pension scheme contributors being, in the majority of cases, less than contributions paid is to be found in the insurance basis of the old pension scheme. Under that scheme, substantial benefits were available to a contributor on his invalidity retirement or to his widow and children on his death whilst a contributor. The cost of these benefits was met partly by the Government and partly from the Superannuation Fund. Generally, a contributor at the time of his premature retirement or death would not have paid enough, even after allowing for earnings on his contributions, to meet the expected cost of that part of the future pension benefits payable from the Superannuation Fund; the shortfall, which was considerable when the retiring or deceased contributor was young, was shared amongst the remaining contributors. Thus, at 30 June 1976, the total allocation of basic and supplementary contributions for each contributor not only reflected the contributions paid by him and the income those contributions had earned but also his share of the cost of benefits payable to others and any surplus and refunds of excess contributions he had previously received. {: type="1" start="2"} 0. Surplus interest earnings on contributors' funds during the period 1 July 1972 to 30 June 1976 were allocated in a similar manner to that used at the 1974 distributions of the surplus found in the Superannuation Fund as at 30 June 1972, and was included in pension scheme contributors 'supplementary contributions as at 30 June 1 976. For each of the four years in the period 1 July 1 972 to 30 June 1 976 the average actuarial reserve in the Fund for a contributor was calculated. The surplus interest earned in each of those years was allocated in proportion to the average actuarial reserve for the year for each contributor, this approach being designed to achieve equitable treatment for all contributors. {:#subdebate-116-12} #### Migrant Selection System (Question No. 3438) {: #subdebate-116-12-s0 .speaker-K9M} ##### Mr Les Johnson:
HUGHES, NEW SOUTH WALES · ALP asked the Minister for Immigration and Ethnic Affairs, upon notice, on 21 March 1979: {: type="1" start="1"} 0. 1 ) Are all applicants for migrant entry to Australia under the Government's new migrant selection system (NUMAS) interviewed before a determination as to their suitability is made. 1. If not, (a) how many applicants from (i) Greece, (ii) Turkey, (iii) the United Kingdom, (iv) the United States of America, (v) Lebanon, (vi) India (vii) Pakistan, (viii) France, (ix) Italy, (x) Ireland, (xi) South Africa, (xii) Chile, (xiii) Israel, (xiv) Cyprus, (xv) Malta, (xvi) Mauritius, (xvii) Indonesia, (xviii) the Philippines, (xix) Fiji and (xx) Rhodesia have been determined as unsuitable without a personal interview since the system was introduced and (b); what percentage of all migrant applications received from those countries were rejected (i) without interview and (ii) after an interview. {: #subdebate-116-12-s1 .speaker-0I4} ##### Mr MacKellar:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. and (2) Under Australia's migrant screening procedures, all applications are assessed to ascertain whether applications meet basic eligibility criteria for immigration. The application forms of persons meeting the basic eligibility requirements are then assessed to avoid calling to interview persons who would be unable to meet NUMAS requirements regardless of their assessment on other factors; this is intended to avoid unnecessary interviews and giving false hope to persons who would clearly not meet interview requirements. This pre-interview screening is based largely on the NUMAS factors, occupational skills, occupational demand, pre-arranged employment, age and transferable assets for resettlement, which can be assessed from information given on application forms. Criteria remain uniform throughout the world. However, differences in systems and standards from country to country necessitate variations in the sequence in which the various screening measures are undertaken. For example, in countries where documentary evidence of trade training is difficult to obtain and authenticate, assessment of qualifications would be left to a late stage of the procedures after applicants had met other requirements; in countries where documentation was readily available, this would be assessed at an early stage. Therefore, rejections on the basis of nonrecognition of qualifications might occur pre-interview in some posts and post-interview in others. For this reason, comparative statistics on rejection rates are not available. {: .page-start } page 359 {:#debate-117} ### UNCTAD 5 {:#subdebate-117-0} #### (Question No. 3441) {: #subdebate-117-0-s0 .speaker-ZJ4} ##### Mr Willis: asked the Minister for Trade and Resources, upon notice, on 2 1 March 1979: {: type="1" start="1"} 0. 1 ) What preparations are being made by his Depanment for UNCTAD 5. 1. Will the Government offer opportunities for public consultation over the issues to be debated at UNCTAD S. {: #subdebate-117-0-s1 .speaker-BU4} ##### Mr Anthony:
NCP/NP -The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. 1 ) Work in preparation for UNCTAD 3 was carried out in my own and other relevant Departments following the official announcement that UNCTAD S was to be held in Manila in May 1979. This work included Australian representation at relevant international meetings and, in particular, at a Special Session of the UNCTAD Trade and Development Board which was convened to consider the UNCTAD 5 Agenda. 1. ) No special arrangements were made for public consultation but the Department of Trade and Resources at the request of interested organisations and individuals provided information on the Conference and also attended several seminars. {:#subdebate-117-1} #### Marine Science Research (Question No. 3462) {: #subdebate-117-1-s0 .speaker-HI4} ##### Mr Morris:
SHORTLAND, NEW SOUTH WALES asked the Minister representing the Minister for Science and the Environment, upon notice, on 2 1 March 1979: >What action has the Minister taken to implement the recommendation of the House of Representatives Standing Committee on Environment and Conservation in its report on Oil Spills that the then Minister for Science review priorities to determine the need for increased allocation of resources to marine science research. {: #subdebate-117-1-s1 .speaker-QK5} ##### Mr Groom:
LP -The answer to the honourable member's question is as follows: >I refer the honourable member to the Prime Minister's answer to Question No. 34S4 in the House of Representatives on 1 May 1979 *(Hansard,* 1 May 1979, page 1714). Uranium: Effects on Health (Question No. 3501) {: #subdebate-117-1-s2 .speaker-VE4} ##### Dr Blewett:
BONYTHON, SOUTH AUSTRALIA asked the Minister for Health, upon notice, on 22 March 1979: >Has the Australian Atomic Energy Commission or any other Federal agency established a transuranium register of persons who have come into contact with uranium or its radio-active products so that the long term effects on health can be monitored: if not, why not. {: #subdebate-117-1-s3 .speaker-GH4} ##### Mr Hunt:
NCP/NP -The answer to the honourable member's question is as follows: >No. A transuranium register would include persons coming in contact with uranium. In view of the limited work done in Australia with plutonium, the Government does not see the need to establish a transuranic register. Such work as is done, is mostly undertaken by the Australian Atomic Energy Commission which keeps comprehensive records of all employees who may be exposed to radiation or radioactive contamination. > >The Code of Practice on Radiation Protection in the Mining and Milling of Radioactive Ores, 1975, prepared by my Department is at present being adopted for inclusion in the Environmental Protection (Nuclear Codes) Bill 1978 which is the responsibility of my colleague, the Minister for Science and the Environment. The Code recommends continued health surveillance including pre-employment, continuing and post-employment medical examinations. Section 5.9.2 provides that on termination of employment all medical records of an employee shall be transferred to the central health authority and kept for 50 years. > >Discussions on all aspects of the Code are at present being held with the States. > >To extend this type of recording to such other areas as agricultural and industrial applications of radioactive materials. laboratories and educational institutions using radioactive materials. hospitals and clinics, involved in nuclear medicine (including both staff and patients). > >Commonwealth and State Government departments and establishments involved in nuclear activities such as the Australian Atomic Energy Commission, Commonwealth Scientific and Industrial Research Organisation, Australian Radiation Laboratory, and State Health Departments. would be a massive undertaking. > >The Australian Radiation Laboratory has provided for many years a film badge service for all users of radioactive materials so that effective controls can be maintained. Cigarette Advertising on Television (Question No. 3527) {: #subdebate-117-1-s4 .speaker-KH4} ##### Mr BARRY JONES:
LALOR, VICTORIA · ALP asked the Minister for Post and Telecommunications, upon notice, on 27 March 1979: {: type="1" start="1"} 0. Is it a fact that bans on cigarette advertising on television are being flouted constantly, for example by lengthy exposure of cigarette posters (Winfield) at telecasts of sporting events. 1. If so, what action has he taken or does he propose to take to control extra-legal television advertising. 2. Will he consider giving a directive that, for example, where 5 minutes in a sporting telecast are devoted to exposure of cigarette advertisements equal time should be given to anti-smoking advertisements. {: #subdebate-117-1-s5 .speaker-GY5} ##### Mr Staley:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. 1 ) The exposure of posters and other advertising matter in the background during sporting telecast is provided for specifically in Section 100(10) of the Broadcasting and Television Act. 1. In view of Section 100 ( 10), the question of extra-legal advertising does not arise. 2. The exposure of anti-smoking advertising matter in terms of Section 100 ( 10) of the Act would be a matter between the anti-smoking group and the sporting authorities concerned in the events being telecast. {:#subdebate-117-2} #### Cyclone Probing Program (Question No. 3576) {: #subdebate-117-2-s0 .speaker-FH4} ##### Mr Humphreys:
GRIFFITH, QUEENSLAND asked the Minister representing the Minister for Science and the Environment, upon notice, on 28 March 1 979: {: type="1" start="1"} 0. 1 ) What applications have the Minister or any of his colleagues received for assistance for a cyclone probing program known as Storm-Fury to operate in conjunction with a similar program in the United States of America. 1. Will the Minister give this proposal his earliest and earnest consideration. {: #subdebate-117-2-s1 .speaker-QK5} ##### Mr Groom:
LP -- The Minister for Science and the Environment has provided the following answer to the honourable member's question: {: type="1" start="1"} 0. 1 ) The Department of Science and the Environment and other Commonwealth Departments have been giving consideration to the feasibility of collaboration between Australia and the United States of America in the operation from Australia of a US tropical cyclone research program known as Project Stormfury. This is a long-term research project conducted by the US National Oceanic and Atmospheric Administration (NOAA) with the aim of developing techniques for amelioration of tropical cyclones using cloud seeding. {: type="1" start="2"} 0. I assure the Honourable Member that the proposal is being given full consideration. {:#subdebate-117-3} #### Petroleum Products: Wholesale Prices (Question No. 3593) {: #subdebate-117-3-s0 .speaker-RK4} ##### Mr Hayden: asked the Minister for Business and Consumer Affairs, upon notice, on 28 March 1979: >What was the maximum justified wholesale price for each petroleum product for each company required to notify proposed price increases for petroleum products to the Prices Justification Tribunal, as at (a) 31 August 1973, (b) 31 January 1976, (c) 31 August 1977, (d) 30 September 1977, (e) 31 August 1978, (f) 30 September 1978, and (g) 27 March 1979. {: #subdebate-117-3-s1 .speaker-CG4} ##### Mr Fife:
LP -- The answer to the honourable member's question is as follows: >Maximum justified wholesale prices in Melbourne on the dates specified in (a) to (g), for major petroleum products supplied by companies that were required to notify their prices to the Prices Justification Tribunal in that period, are shown in the attached tables. > >Maximum justified wholesale prices for all petroleum products supplied by these companies in all localities would take considerable time and resources to compile. However, the trend in prices justified for Melbourne would be indicative of the trend in maximum justified wholesale prices throughout Australia. {:#subdebate-117-4} #### Kakadu National Park (Question No. 3610) {: #subdebate-117-4-s0 .speaker-KDP} ##### Dr Everingham:
CAPRICORNIA, QUEENSLAND asked the Minister representing the Minister for Science and the Environment, upon notice, on 29 March 1979: {: type="1" start="1"} 0. 1 ) Has the Government been informed during the last 2 months by the Northern Territory's Chief Minister that the Territory Government wishes to see Kakadu National Park declared as soon as possible? 1. 2 ) What is the present delay in declaring the Park? {: #subdebate-117-4-s1 .speaker-QK5} ##### Mr Groom:
LP -- The Minister for Science and the Environment has provided the following answer to the honourable member's question: {: type="1" start="1"} 0. Both the Northern Territory and Commonwealth Governments have been anxious that Kakadu National Park be declared as soon as possible. 1. The Kakadu National Park was declared on 5 April 1979. {:#subdebate-117-5} #### Control of Commercial Radio Stations (Question No. 3629) {: #subdebate-117-5-s0 .speaker-SH4} ##### Dr Klugman: asked the Minister for Post and Telecommunications, upon notice, on 3 April 1979: {: type="1" start="1"} 0. 1 ) Has his attention been drawn to a report prepared by the Federation of Australian Radio Broadcasters, that (a) 28 commercial radio stations are deemed to be controlled by newspaper companies, (b) 1 1 by television station licensees and (c) 22 by companies in a position to also control a television station licence; if so, is the position as stated in the report. 1. 2 ) What are the names and locations of these commercial radio stations. {: #subdebate-117-5-s1 .speaker-GY5} ##### Mr Staley:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. and (2) Yes. The position as stated in the report reflects the situation as at 30 June 1 977. {: type="a" start="a"} 0. 2GB Sydney, 2CA Canberra, 2WL Wollongong, 2 AD Armidale, 2LM Lismore, 2MW Murwillumbah; 3AK Melbourne, 3AW Melbourne, 3DB Melbourne, 3XY Melbourne, 3BA Ballarat, 3GL Geelong; 4BH Brisbane, 4BK Brisbane, 4AK Oakey, 4GG Gold Coast, 4GY Gympie; SAD Adelaide, SDN Adelaide,5PI Crystal Brook,5SE Mount Gambier; 6PM Perth, 6AM Northam, 6KG Kalgoorlie, 6GE Geraldton, 6VA Albany; 7HO Hobart, 7EX Launceston. 1. 2RG Griffith; 4AY Ayr, 4GC Charters Towers; 6KY Perth, 6IX Perth, 6BY Bridgetown, 6WB Katanning, 6TZ Bunbury, 6CI Collie, 6NA Narrogin; 7HT Hobart 2. 2AY Albury, 2GF Grafton, 2GN Goulburn, 2CH Sydney, 2 AD Armidale, 2 RE Taree, 2MO Gunnedah, 2TM Tamworth, 2GZ Orange, 2NZ Inverell, 2MW Murwillumbah, 2LM Lismore; 3BO Bendigo, 3SR Shepparton, 3UL Warragul, 3YB Warrnambool, 3TR Sale; 4CA Cairns, 4TO Townsville, 4MK Mackay, 4GG Gold Coast; 7LA Launceston. {:#subdebate-117-6} #### Medical Incomes (Question No. 3646) {: #subdebate-117-6-s0 .speaker-ZJ4} ##### Mr Willis: asked the Minister for Health, upon notice, on 4 April 1979: {: type="1" start="1"} 0. 1 ) What evidence is there for the conclusion in the report of the Committee of Officials on Medical Manpower Supply that past changes in health insurance arrangements and increases in medical fees have combined to increase medical incomes at a faster rate than incomes in the community generally. 1. What is (a) the average income of full-time doctors, (b) their median income and (c) their range of income. 2. What steps are being taken to study this issue as recommended in the report. 3. What means of limiting the growth of medical incomes to more equitable rates are under consideration. {: #subdebate-117-6-s1 .speaker-GH4} ##### Mr Hunt:
NCP/NP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. I understand that the major factor underlying the Committee's conclusions was the introduction of universal health insurance in 1975 by the Labor Government at that time. This introduced increased payments to medical practitioners for services to eligible pensioners and provided a common benefit to all patients who incurred medical expenses without the effective involvement of patients in the major portion of the cost of medical services and without an effective means of monitoring excessive services by the Government of the day. The Medibank Mark I Scheme also provided for payments to medical practitioners in some States for services previously rendered in public hospitals in an honorary capacity. These features meant that medical practitioners were able to obtain additional income for a smaller relative increase in workload and were generally free to provide any service to patients irrespective of cost in the knowledge that they would obtain payment for those services. The Committee also had regard to movements in Medical Benefits Schedule fees which increased by about 90 per cent between December 1972 and January 1976. Increases since January 1976 to January 1978 were about 16 percent. These increases compare with increases in Average Weekly Earnings and the Consumer Price Index of about 67 per cent and 50 per cent respectively over the period December 1972 to January 1 976, and about 24 per cent and 25 per cent respectively over the period January 1 976 to January 1978. {: type="1" start="2"} 0. (a) (b) and (c) The data available to my Department does not provide precise information on the incomes of doctors in full-time private practice. What information is available relates to Taxation Statistics which include income from all sources. In this regard, I refer the honourable member to the Supplement to the Fifty-sixth Report to Parliament of the Commissioner of Taxation- 'Taxation Statistics 1 976-77 ', particularly pages 30 and 3 1 . 1. As mentioned above, data on doctors' incomes are very limited and my Department does not have sufficient data to enable a full study of this issue to be carried out at this stage. Statistics on the payment of medical benefits and other limited statistics are currently being examined by my Department with the view to obtaining more data on doctors 'income levels. 2. The Government does not have the constitutional authority to control prices, and hence doctors' fees. However, the influence exerted by the Government in this area relates to the fixing of the level of Schedule fees on which benefits for services rendered by medical practitioners are based. Generally, proposals by the AMA on changes to the level of Medical Benefits Schedule fees are referred to an independent Enquiry, to which the AMA and the Government make submissions. The Enquiries are required to have regard to, amongst other matters, economic circumstances affecting medical practitioners and the community generally. In 1976, the AMA proposed an overall 7.5 per cent increase in doctors' fees from 1 January 1977. This was substantially lower than the increase of 1 4 per cent indicated by the Australian Medical Association's calculations of the increases necessary to meet higher practice costs and maintain net income of medical practices. This increase of 7.5 per cent was introduced from 1 January 1977 on the basis of agreement that there would be a detailed Enquiry in 1977 on fees to apply from 1 January 1978. At the 1977 Enquiry under the honourable **Mr Justice** J. T. Ludeke, the Government proposed increases less than those sought by the AMA, and opposed some 'catch-up' elements in the AMA's proposal. Again, the increase was much less than might have been expected on the basis of movements in Average Weekly Earnings and other economic indicators. In 1978, the AMA offered to defer adjustments to fees from 1 January 1979 until 1 November 1979 on the condition that an independent enquiry was established early in 1979 to determine adjustments to fees effective from 1 November 1979. The Government agreed to this proposal and announced on 1 March 1979 the establishment of the 1979 Medical Fees Enquiry under **Mr Justice** Ludeke. The Government has submitted to this Enquiry a policy of restraint consistent with its overall economic policy in relation to prices, wages and incomes. As well, the Government has taken action to stop the provision of unnecessary medical services and the making of fraudulent claims. Departmental medical officers counsel doctors when indicated regarding their billing and practice patterns. In addition the AMA has co-operated in setting up a Medical Services Committee of Inquiry in each State to which 17 doctors have been referred after failure to respond to counselling. {:#subdebate-117-7} #### Tasmanian Tourist Industry (Question No. 3656) {: #subdebate-117-7-s0 .speaker-RK4} ##### Mr Hayden: asked the Minister for Industry and Commerce, upon notice, on 5 April 1979: {: type="1" start="1"} 0. With reference to the Government's 10 point policy package for Tasmania announced in November 1977, has his Department investigated ways in which the Tasmanian tourist industry might be further encouraged. 1. If so, what were the recommendations of the examination and have any of them been acted upon. {: #subdebate-117-7-s1 .speaker-KIM} ##### Mr Lynch:
LP -- The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. 1 ) Yes. In conjunction with Tasmanian State Government' officials, my Department has been examining ways in which the Tasmanian tourist industry might be assisted. 1. Tasmania put forward a tourism strategy plan which included several tourism projects which could be assisted. This plan was the subject of detailed examination and discussion by Commonwealth and State officials who have recommended that priority be given to the development of Port Arthur. A proposal involving the expenditure of some $9.2m on the conservation and development of Port Arthur has been submitted to the Commonwealth for consideration and is being examined in the context of the 1 979-80 Budget. Two other matters still under consideration are the Tasmania-New Zealand air link proposal and the question of improved access to Tasmania from the mainland. {:#subdebate-117-8} #### Commonwealth Banking Corporation (Question No. 3671) {: #subdebate-117-8-s0 .speaker-KJO} ##### Mr James:
HUNTER, NEW SOUTH WALES asked the Treasurer, upon notice, on 5 April 1979: {: type="1" start="1"} 0. 1 ) What sum was fraudulently obtained from the Commonwealth Banking Corporation by (a) cheque passing, (b) savings withdrawals, (c) loans and (d) credit card fraud, during each of the years 1975-76 to 1977-78. 1. 2 ) How much was recovered in each year. 2. What steps have been taken to correct this situation. 3. How much did it cost the Government to investigate and replace stolen Government cheques during each of the years 1975-76 to 1977-78. 4. ) How many arrests have been made in connection with the offences in part ( 1 ). {: #subdebate-117-8-s1 .speaker-ZD4} ##### Mr Howard:
LP -The answer to the honourable member's question is as follows: {: type="1" start="1"} 0. and (2) Banks do not provide information on these matters to the authorities. The Corporation has suggested, and I have accepted its advice, that it would not, for competitive reasons, be desirable for information on its position to be made publicly available in isolation. There would also be some costs involved in assembling the data requested. 1. It would not be appropriate, for security reasons, to make information about any steps taken by the Commonwealth Banking Corporation to reduce losses through fraud publicly available. 2. The Department of Finance has advised that costs are incurred within the several cheque-issuing Departments and by the Commonwealth Police in investigating and replacing Commonwealth Government cheques negotiated without the authority of the bona fide payee. It is not practical to segregate the costs attributable to such replacements from the costs of other investigations. 3. This information is not readily available: arrests would have been made by State as well as Commonwealth Police. {:#subdebate-117-9} #### Telephone Services: Local Call Rate Zones (Question No. 3681) {: #subdebate-117-9-s0 .speaker-RK4} ##### Mr Hayden: asked the Minister for Post and Telecommunications, upon notice, on 1 May 1979: >What is the (a) average, (b) minimum and (c) maximum distance from the centr