Mr SPEAKER (Hon. Sir William Aston) took the chair at 3 p.m., and read prayers.
page 3
ELECTORAL
Division of Chisholm - Issue of Writ
Mr SPEAKER:
-I have to announce with deep regret the death on 31st July 1970 or the honourable member for Chisholm, the Hon. Sir Wilfrid Selwyn Kent Hughes.I have to inform the House that on 13th August I issued a writ for the election of a member to serve the electoral division of Chisholm in the State of Victoria in place of the deceased gentleman. The dates in connection with the election were fixed as follows: Date of nomination, Friday, 28th August 1970; date of polling, Saturday, 19th September 1970; date of return of writ, on or before Friday, 16th October 1970.
page 3
DEATH OF THE HONOURABLE SIR WILFRID KENT HUGHES, K.B.E.. M.V.O., M.C., E.D., M.P
Mr GORTON: Prime Minister · Higgins · LP
-Mr Speaker, you have already referred to the loss which this Parliament suffered during the recess owing to the death of Sir Wilfrid Kent Hughes. I move:
That this House expresses its deep regret at the death on 31 July 1970 of the Hon. Sir Wilfrid Selwyn Kent Hughes, K..B.E., M.V.O., M.C., E.D., a member of this House for the division of Chisholm from 1949 to 1970 and a Minister of the Crown from 195 1 to 1956, places on record its appreciation of his long and meritorious public service and tenders its profound sympathy to his widow and family in their bereavement.
I do not really think that I need to tell this House that Billy Kent Hughes, as we all knew him, was a remarkable man and a fine Australian. In a crowded lifetime of 75 years he time and again demonstrated his courage, determination, integrity and rugged individuality, and with these qualities were combined a high sense of service, exceptional abilities and great humanity, making him one of the outstanding personalities of this Parliament. He was well known as a fearless fighter for the causes he espoused, and in the party room and in the Parliament he was articulate, dogged and outspoken. Many members of this chamber would have often disagreed with him but I believe that most of his parliamentary colleagues, if not all, on both sides of the House, had a respect and an affection for him at all times. As the oldest member of the Parliament be could look back on a lifetime of achievement and service that few men could rival, as scholar, soldier, sportsman, parliamentarian and even poet. He devoted 43 years of his life to service in Parliament: 21 years in this House and before that 22 years as a member of the Victorian Legislative Assembly. He was an enthusiastic traveller and had a wide knowledge of world affairs. He was greatly concerned about the defence and security of the country for which he bad fought with such distinction in 2 world wars. He was also an ever-ready advocate for the welfare of servicemen.
His own military career began when he enlisted in the Australian Imperial Force shortly after the start of the First World War. He served overseas in the 3rd Australian Light Horse Brigade and the Australian Mounted Division. He was mentioned in despatched 4 times, awarded the Military Cross and ended that war as the youngest major in the Australian forces. He then took up the Rhodes Scholarship at Oxford which he had won in 1914 and went on to gain his Master of Arts degree. The late Sir Wilfrid Kent Hughes was back in uniform again in 1940, served in Malaya and was promoted to colonel. He was captured by the Japanese at the fall of Singapore and spent 3½ years in Changi and other prison camps. It was while he was a prisoner of the Japanese that he wrote one of his best known works, ‘Slaves of the Samurai’. In the Second World War he was again mentioned in despatches and was awarded the Efficiency Decoration.
Another area in which Sir Wilfrid gave distinguished service was in the field of sporting activities, both as an athlete in his own right and as an administrator. He represented Australia as a hurdler in the 1920 Olympic Games and in the same year ran in the British Empire versus United States of America Games and the England versus France athletics. In 1938 he was manager of the Australian team at the Empire Games. He became President of the Victorian Olympic Council in 1953 and President of the Victorian Amateur Athletics Association in 1958, positions which he still held at the time of his death. He was, of course, chairman of the organising committee which staged the highly successful Melbourne Olympics in 1956.
Sir Wilfrid’s political career began in 1927 when he entered the Victorian Legislative
Assembly as member for Kew. During the next 22 years he held a number of portfolios in the Victorian Government and was Deputy Premier for 1 year. He transferred to the Federal Parliament by winning the seat of Chisholm in the general election of 1949. In his 21 years in this House he was a member of the Privileges Committee, Minister for the Interior, Minister for Works and Housing from 1951 to 1956, and Chairman of the Joint Parliamentary Committee on Foreign Affairs from 1956 to 1961. He was knighted in 1957.
So much for the official record. Many of us also will have personal memories of events and activities which showed Billy Kent Hughes as the vital personality that he was. We will remember his concern for physical fitness - even last session he could be seen jogging around Lake Burley Griffin most mornings - and his concern for the trim condition be maintained which led to his capacity to continue to wear the uniform which has graced him in 2 world wars. Indeed, Mr Speaker, I understand that he used to ride a horse in his Light Horse uniform in Anzac Day marches as a returned soldier of the First World War and then return by car to march as a returned soldier of the Second World War. We will remember him in that uniform at the unveiling a couple of years ago of the Light Horse memorial in Canberra, which was another project to which he directed his energies.
The Parliament and the nation have lost a devoted servant and a great Australian. I believe that we are the richer for his lifetime and the poorer for his passing. To Lady Kent Hughes, his children and grandchildren we who have known him for so long extend our deepest sympathy.
Mr WHITLAM: Leader of the Opposition · Werriwa
– On behalf of the Australian Labour Party, I support the Prime Minister’s motion of regret, appreciation and sympathy. None of us can fail to be aware of how sharply the death of Sir Wilfrid Kent Hughes breaks a living link with an era he himself embodied for us as the oldest member of the House of Representatives. The mere presence of men like the former honourable member for Chisholm, retaining full vigour to the very last, tended to obscure how very many years, indeed generations, have passed since the rise of his generation - the generation of Anzacs. He was the last of this Parliament’s original Anzacs. He enlisted on the day recruiting opened. Now only the Deputy Prime Minister (Mr McEwen), the honourable member for Mitchell (Mr Irwin) and Senator Hendrickson remain of the scores of members of the national Parliament who had enlisted in the first Australian Imperial Force. He not only belonged to that generation but he was also an archetype. When one recalls Sir Wilfrid Kent Hughes’ manner, style, fitness - even his features and physique - one gains a little insight into what manner of men those were who, in the words of Clemenceau, ‘astonished Europe by their valour from the very beginning’.
There would be few members of this House with whom I and most of my Party would have so consistently disagreed as our late colleague. I find it all the more appropriate to state this, in these circumstances, when I recall a particular and characteristic act of spontaneous chivalry by Wilfrid Kent Hughes on a similar occasion 7 years ago when this House paid its tribute to the late Edward John Ward. There could have been no 2 men more opposed and who more relished the give and take of opposing; but those of us who were here well remember, and those on this side remember with particular appreciation, the unstinted tribute the late member paid to Mr Ward for his pioneering work on rail standardisation. In that great work Wilfrid Kent Hughes, as Minister for Transport in the Victorian Parliament, played an equally notable part.
He was the senior serving parliamentarian in Australia. He had been in this and in the Victorian Parliament, as the Prime Minister stated, for 43 years - more than half the life of our federation. He served as a Minister in both parliaments. Yet it was as a private member - in spirit nearer the cross benches than the back - that he made his mark here. It is pleasing to recall that the last motion in his name - or at least that half of it relating to Cockburn Sound - received support from all quarters. Yet it is perhaps just as significant, as a key to the independence of his career, that the second half of his motion received scarcely any support, and none of it official. If Wilfrid Kent Hughes so often walked alone, he walked very straight.
Mr McEWEN: Minister for Trade and Industry · Murray · CP
– 1 desire to associate the members of the Australian Country Party with the motion proposed by the Prime Minister (Mr Gorton) and supported by the Leader of the Opposition (Mr Whitlam). Our late colleague, Sir Wilfrid Kent Hughes, was by any standard a great man in his day. He exemplified his greatness in many spheres. It is not every great man who is necessarily a likeable man. Sir Wilfrid Kent Hughes was great by any test that one could make, and a man to be friends with and to respect on any occasion. It was my good fortune to commence my friendship with him some years before I came into the Federal Parliament and when he was serving in the State Parliament of Victoria. I have never known an incident in Billy Kent Hughes’s life that did not mark him as a man of great integrity, of great dedication and of great courage, whether it was physical courage in war or moral courage which is called for on occasions in the lives of people who enter politics.
The story of his life has been told by th.> Prime Minister and the Leader of the Opposition. I remember him for many things. Perhaps one of the best memories I have of him is that he, along with Sir Thomas Blarney, Judge Drake-Brockman and a few others who had all served in the First World War, came to the conclusion in the mid-1 930s that war was certain to come. This group gathered together, particularly around Sir Thomas Blarney, and dedicated themselves to preparing for what they regarded as the inevitability of war and to persuading many others that if war was to come there had to be a greater consciousness in the Australian political mind and the public mind generally. It is not given to many to be so prescient as this, nor to be so dedicated. He was a man who had in the First World War, served his country in a manner that demanded no further service. It is true that he was the youngest man in the first AIF to hold field rank, the rank of major. At the time of which I am speaking - in the 1930s - he was Deputy Premier of Victoria and might well have felt that he could go on serving his State and his country without preparing himself for another war which he correctly saw coming. But he was not the kind of man who avoided any call to which he felt it was his part to respond.
It was his fate, of course, going with the 8th Division to Malaya, to be taken prisoner and to be held by the Japanese. It was a pretty terrible experience but not one that prevented him from coming back and reentering the public life of the country with all the energy and dedication that he had. Those of us who sat with him in the Parliament and in Cabinets are well aware of his tremendously wide interest in what he conceived to be the basic welfare and security of the country. He was a man who devoted himself to comprehending the problems of international relationships, and he brought the results of his study, his very frequent visits overseas and the contacts that he made into the Cabinet room, into the Party room and into the Parliament. He was a very great man and a very good man, and his life could well serve as an example for others to endeavour to emulate. I join in expressing the deepest sympathy of my colleagues of the Austraiian Country Party to Lady Kent Hughes and to the family.
Mr KILLEN: Minister for the Navy · Moreton · LP
– The man whose memory this Parliament honours today often quoted these words: l slept and dreamt that life was beamy;
I woke and found that life was duty.
Paradoxically the origin of this couplet was obscured from him; the force of it he well knew. We all I believe at one time or another try to grasp the meaning and purpose of life, and for most of us it is a halting and imperfect quest. It was never so to W. S. Kent Hughes. To him life was duty - duty to a power in this world but not of this world; duty to his country and to his people; duty to his political principles as he saw them; duty to those who reached out for help and who sought the gentle instinct of a firm but very generous mind. Neither he himself nor the firmest of his friends would have ever made pretence that in following his duty he was not frequently plunged into conflict, fierce and tempestuous. Nor would the most composed of his opponents have hesitated to agree that he always emerged from that conflict the same - no rancour, no meanness and no lasting hurt. Certainly he sought the vindication of his views. We all do. If the modesty of truth can intrude for a moment, how seldom is it we stop to think how irrelevant many of our views are in the infinite sweep of events?
With his disciplined knowledge of history and with his own practised role in its creation, no sense of vanity trammelled W. S. Kent Hughes in his argument. For one to have lived out his days as our late colleague did so vigorously and with such splendid good humour and to have won such wide respect in his own country was a revelation of the man he was. That was not the boundary of that remarkable man’s achievement. Few, if any, have passed through this Parliament and won such wide respect in so many countries and among so many people. We are reminded: ‘For here have we no continuing city but we seek one to come’. Wilfrid Selwyn Kent Hughes has gone to his continuing city and on that list which stretches out forever we can gladly write his name. His proud and restless spirit yet shall beckon and alert. In life its constant companions were courage and honour. And now not even death can contrive to make them desert.
Mr CALWELL: Melbourne
– The Prime Minister (Mr Gorton) has paid a well deserved tribute to the memory of a very remarkable man and there is nothing that I or anybody else can add to the Prime Minister’s tribute. Sir Wilfrid Kent Hughes lived a full life. He lived it vigorously. He fought the good fight always. He never lowered his sword. He never asked for quarter and he never gave any. He always fought the good fight without rancour. After the struggle was over he had all that the Prime Minister said in the matter of humanity and even humility. I knew him for longer than anyone else in this House. I knew him from the time he entered the Victorian Parliament in 1925. I feuded with him often as a member of the Victorian Executive of the Labor Party. I feuded with him while he was a State parliamentarian and afterwards when he came to the National Parliament in 1949, which 1 had entered 9 years previously. But our friendship was always firm. It was always constant. He came to see me - as he often did. or 1 went to his room in the new Commonwealth offices in Melbourne to see him - and said he wished to go away on another world visit. He said that it would be his last. He said: I want to go to a meeting of former Rhodes scholars and I would like a pair.’ 1 said: ‘Well, you will always get a pair from me. Billy, if you want one.’ He said: ‘Well, you and I are two of the last of our generation left and we have known each other and respected each other.’ That was my last conversation with him. The shock of his death the day after he had been in the Commonwealth Parliament offices - I did not see him then - was distressing to me as it was to many other people 1 have said that he was a remarkable man. He had courage, fortitude, physical endurance, mental strength and determination right to the end. But above all that he had sincerity. Whatever he believed lie said. I have never known him to excuse himself or to withdraw any remark or anything he wrote in which he believed. I think he died as he would have wanted to die - in the evening of his life. J think he died as most people would want to die. He entered his eternal repose in the depths of his sleep.
Mr JESS: La Trobe
– I feel most humble indeed even to enter this debate after the standard of the speeches that have been made. When I attended the funeral of Sir Wilfrid Kent Hughes with so many others 1 sat in the church and looked at the noble gathering that attended and I thought much of the man whom I had known over many years through family friendship and through my experience in this House. I know that 1 say on behalf of every backbencher on either side of the House that Bill Kent Hughes had the amazing ability to be with all men of whatever age. As I heard it described yesterday, he could speak even to children and reach a common ground with them. We backbenchers in this House - many of us radicals, rebels or whatever we may be called occasionally - could always seek out Bill Kent Hughes and receive sound advice which perhaps would temper what we had been thinking was good common sense. We all owed an obligation to him. However, this is not what I wanted to say.
While I was sitting in the church I thought of the number of occasions on which I had heard Bill Kent Hughes in debate on television or radio and in other spheres. I have heard him called a racist but I think it should be said - and, indeed, it was understood by all who were debating with him - that no man had more friends in Asia, South East Asia and Africa than he. He went out and sought their friendship and whatever he said or did was done for the benefit of these people and of the world. As the Deputy Prime Minister (Mr McEwen), and others have said, when he debated, perhaps with young university students who were just going out into life and who had not had his experience or suffered as he had done, he was not vindic tive. Perhaps he could not understand their viewpoint, but he never finished a debate without a word of sympathy for them or expressing concern and interest in the outlook against which he had edneavoured to persuade them.
I ask myself what Bill Kent Hughes himself would like to be said on this occasion. I look at him as a man who, through death, has been forced to put down his load of sticks. As the Deputy Prime Minister said, in the 1930s Sir Wilfrid was one of those who warned of the dangers confronting this country. He tried to tell people what could occur. War did occur. He unfortunately, together with many others, was imprisoned for many years by an Asian people. Later he gained much sympathy for the people of South East Asia for saying what he thought could happen in that region if ever again people should be too complacent. He had the courage to say what he thought should be said. I should like to say, on behalf of Bill Kent’ Hughes and all those men like him: Do not just praise my name; remember some of the things that I stood for; remember some of the messages I endeavoured to give you’. Only time will tell whether many of the things he said were right or wrong but I feel that some may be right.
In conclusion I should like to quote the first canto of ‘Slaves of the Samurai’ which was written by Sir Wilfrid himself and which was read in the church. I feel it contains the message of Sir Wilfrid Kent Hughes - a message that should not be confined to that church but should be given to Australia. It reads:
The simple lessons of mankind can be
So clearly read in every history.
Ideals, without a strong right arm, are less
Than voices crying in the wilderness.
A strong right arm is nurtured not by sloth,
Pursuit of pleasure, or by pride of cloth;
But by self-discipline and sacrifice
Which keeps in check ease, luxury, and vice -
The parasites which, with insidious greed,
Destroy the parent host on which they feed. 1 should like to extend my sympathy to Lady Kent Hughes and all members of the family. This man has gone to what to me - h may be wrong for me to say it - is his Valhalla. By that I mean not the host of the warmonger but the host of men who have served their country gallantly. I think that a very gallant gentleman and a very gallant warrior has joined that host
Mr IRWIN: Mitchell
-! rise to speak for myself and the Government Members ExServicemen’s Committee of which Sir Wilfrid was the Chairman. Sir Wilfrid rose above the trivialities and pettiness of life and lived on a higher plane than most, but always for the betterment of his fellow Australians. He was a man of the highest integrity whose life was spent, in the main, in the defence of Australia both as a soldier and as a parliamentarian. He was an authority on South East Asia and the southern regions of Africa. We are better men for having been associated with him. Despite his greatness in so many fields, his humility was one of his outstanding characteristics. We mourn his passing. We revere his memory. We thank God for his life and example.
Mr WHITTORN: Balaclava
-! join in this valedictory to the late Sir Wilfrid Kent Hughes simply because 1 liked him a lot, respected him a great deal, and loved the way in which he treated the back benchers on this side of the Parliament and, I feel, those on the Opposition side if they sought advice from him. As has been said, in his political views he was very much to the right of centre in some respects, but in other senses he was very much to the left because he had tremendous compassion for the aged, the frail and the infirm. Sir Wilfrid Kent Hughes was always helpful in his attitude to those sections of our legislation that were designed to promote the welfare of people who had helped Australia but who were in need.
He was, as has been said, a very highly intelligent man and he was a complex person in himself; but his personal needs and his own requirements were very few. He asked for very little for Billy Kent Hughes. As many honourable members well know, I was his jogging companion in Canberra. He never left one of those excursions around the lake without saying: ‘Thank you, Ray’. I felt so humble on each occasion when 1 went around with him that a man of his greatness and of his ability should say Thank you’ to me. But this is the type of man that Sir Wilfrid Kent Hughes was.
He was passionately devoted to Australia. This is one of the reasons why he carried out the crusades that he undertook in this Parliament. He was passionately fond of this land of bis birth and of his infant nurture. This gave him the strong political views that he had. Indeed, on the day before he died he had published in the Melbourne ‘Herald’ an article that symbolises Sir Wilfrid Kent Hughes, [t is not complex; it is straight to the point, lt is headed: Time for Us to Wake Up to the Red Threat’. There was no messing around with words. That is what Billy Kent Hughes felt and this is how he wrote.
He was richly endowed with the personal qualities of life. As I have said, he was a highly intelligent man and he reached the attainments of a highly intelligent man. He talked to me less than 24 hours before he died and mentioned the excursion that he was about to take overseas and which has been mentioned by the right honourable member for Melbourne (Mr Calwell). Sir Wilfrid was going to Rhodesia to join a centenary celebration of Rhodes scholars. He was to leave Melbourne on 12th August. No doubt, that celebration will be taking place this week, or perhaps it was held last week. He was to further his education, he said, on the way other people thought and felt on such matters as foreign affairs, defence and Che ability of Australia to help people in South East Asia, Africa and elsewhere. As the honourable member for La Trobe (Mr less) has said, he was not a racist. He looked at the problems as he saw them. He looked at the compassion that was needed in these countries and the good sense 1hat we should try to convey to them if at all possible.
Sir Wilfrid Kent Hughes was deeply imbued with a spirit of service not only to Australia but to all peoples of the world. As the honourable member for La Trobe has said, Sir Wilfrid was able to meet Ministers of State, heads of government and senior citizens and. at the same time, was able to talk to and meet with the children of this country and any country he visited. He was a great man and I too join with those who have extended their condolences to his wife. Lady Kent Hughes, and his family.
Mr SNEDDEN: Minister for Labour and National Service · Bruce · LP
– Many tributes have been paid and the quality of them has been quite remarkable. I had indicated that T wanted to add what might be described as an epilogue. It has already been referred to by the right honourable member for Melbourne (Mr Calwell) and my colleague, the honourable member for Balaclava (Mr
Whittorn), but it does manifest the energy of Sir Wilfrid Kent Hughes and his concern with public affairs right up to his death. Two days before bis death BDI Kent Hughes rang me and told me he wanted to go to Africa for the centenary celebrations of the arrival of Rhodes in South Africa. He would have needed leave for this purpose. I contacted the Deputy Leader of the Opposition (Mr Barnard) and after a favourable response I rang to tell Sir Wilfrid of this. To my great surprise I learnt that he had died just a few hours before. I mention it only because it does manifest the commitment that this man had to matters of public affairs. He intended to go on a world tour to meet so many people he knew for an up-dated appreciation of the world situation. He planned that just 2 days before his death.
Mr UREN: Reid
– I desire to acid my tribute to Sir Wilfrid Kent Hughes. 1 had an unusual relationship with Sir Wilfrid. I first saw him in September 1945 in Manila in a prisoner of war transit camp, and 1 will never forget the impressive, striking appearance of this man with a chest of ribbons. 1 did not meet him again until 1958 when I entered this Parliament. We had a wide divergence of political views and our solutions to problems were not always the same but there was a certain kindness he always showed to me personally. In a way he seemed to tend to protect me when I appeared to be in difficulties. We travelled together to represent this Parliament in April 1.968 at a War Graves Commission ceremony in Ambon, Indonesia, where a great number of our comrades were buried. 1 always found that the men who knew him during the War respected him and had a great feeling for him. He showed kindness in his personal relationships with honourable members on the Opposition side - I know he had close friends on this side of the House - in circumstances where, for instance, their wives were ill. There was always a special kindness about Bill Kent Hughes. This is a strange thing about the Parliament. No matter how wide one’s political point of view may be, no matter how much we can disagree even on the solutions of our problems, there are some things on which we can come together. I want to pay tribute to the kindness Bill Kent Hughes showed me in a personal approach to life and i wish to extend my sympathies to Lady Kern Hughes.
Question resolved in the affirmative, honourable members standing in their places.
page 9
DEATH OF MR A. C. W. FISKEN, C.M.G., O.B.E., M.C
Mr GORTON: Prime Minister · Higgins · LP
– Another former member of this House died during the recess and it is with regret that I have to inform honourable members of the death on 20th June of Archibald Clyde Wanliss Fisken, C.M.G., O.B.E., M.C., who represented the Division of Ballaarat from 1934 to 1937. Although he was a member of this House for a short period only - I should think none of us here had any personal knowledge of him while he was a member, though perhaps someone did - nevertheless he did perform meritorious public service while a member and was particularly well known and respected in the Ballaarat district which he represented. We extend our sympathy to his widow and family.
Mr McEWEN: Minister for Trade and Industry · Murray · CP
– As perhaps the only remaining member of this House who served with the late Mr Fisken I would like to join the Prime Minister (Mr Gorton) and extend my personal sympathy at Mr Fisken’s passing. 1 also associate the members of my own Party with this expression of sympathy.
Mr WHITLAM: Leader of the Opposition · Werriwa
– It will be appreciated that my colleagues and I knew of Mr Fisken only from Reg Pollard, who was a comrade in arms and his political opponent. We know from Reg Pollard that Mr Fisken was a gallant man. We would completely accept that opinion of the late member.
Mr GORTON (Higgins- Prime Minister) - I suggest that as a mark of respect to the deceased the sitting be now suspended until 8 p.m.
Mr SPEAKER:
– 1 feel sure that the suggestion made by the Prime Minister meets with the concurrence of the House. As a mark of respect to the memory of the deceased the sitting is suspended.
Sitting suspended front 3.41 to 8 p.m.
page 9
APPROPRIATION BILL (No. 1) 1970-71
Message from the Governor-General recommending appropriation for proposed expenditure announced.
Bill presented by Mr Bury, and read a first time.
Mr SPEAKER:
– In accordance with Budget practice, I now call on the Chairman of Committees to take the chair as Deputy Speaker.
Second Reading (Budget Speech)
Mr BURY: Treasurer · Wentworth · LP
– I move:
That this Bill be now read a second time.
In doing so I present the Budget proposals for the financial year 1970-71.
By these proposals the Government seeks: - to provide for a large increase in essential expenditures, especially on payments to the States, welfare, development and assistance to industry, including emergency relief for woolgrowers hard hit by drought and low prices; - to make reductions in personal income taxation, especially on lower and middle income earners, estimated to have a value to the taxpayers concerned of $289m in a full financial year and $228m in 1970-71; we thereby make good - indeed more than make good - our undertaking to give substantial income tax relief to this large body of people; - notwithstanding these large commitments, to produce a responsible budget, a balanced budget, a budget shaped to the requirements of an economy that is dynamic and fast-growing - but an economy still threatened by disruptive inflation.
I should like to enlarge upon that last point. In 1969-70 the economy again achieved a high rate of growth. Gross national product at constant prices increased by about 5.5% - this despite the trials and setbacks of rural industry. The number of wage and salary earners increased by no less than 4%. Even though wool prices fell sharply, there was a remarkable increase of 24% in the total value of exports. But the strong lift in activity that lay behind these achievements brought developing stresses. By March, notwithstanding the big inflow of migrants and the entry of more and more married women into the work-force, the labour situation had become very tight, with job vacancies well above the number of registered applicants for work.
The surge in demand for labour reflected a quickening in demand generally. Consumer spending, which increased by 7.2% in 1968-69, moved up by 9.6% in 1969-70. All branches of private fixed capital expenditure - that is to say, on dwellings, other forms of building and construction, plant and equipment - rose strongly until the final quarter of the year when, through tighening of finance, there was a moderate check to housing starts. Public authority spending also rose strongly throughout the year.
In brief, notably though output was increasing, demand was increasing faster. These are typically the conditions in which inflation breeds. Signs that it was active became more evident as the year went on. Cost and price increases gathered pace. Average weekly earnings rose by about 8% in 1969-70. The consumer price index rose at an accelerating rate throughout the year, reaching an annual rate of growth above 5% in the June quarter.
The end-year downswing in liquidity, reinforced as it was by sharp increases in interest rates, produced a marked monetary tightening, although its severity was moderated to some extent by a revival of capital inflow. The most evident effect it had on the demand situation was seen in housing activity; but there was also some general easing of the labour market. Even so, at the end of June the number of registered applicants for jobs did not exceed 1% of the work-force.
The current year thus began with the economy pretty much at full stretch. Prospects for growth are very good provided the call on resources is kept within reason. Certainly, it is entirely possible that the year will see real gross national product increase again by 5.5% or thereabout-. With immigration flowing strongly, there should be a further large addition - more than 3% - to the work-force. The farm outlook is not encouraging but we can reasonably expect a good rise in non-farm productivity. Oar external outlook is promising - in particular, there should be a further large rise in exports. Meanwhile, the fact that Bass Strait oil is coming on stream in a big way will hold down imports quite considerably. Capital inflow has been fairly strong lately though, of course, we cannot be sure of its trend throughout the year.
It is the demand side that will bear watching. Consumer spending is currently very buoyant and that situation seems likely to continue. Private spending on plant and equipment and non-residential building and construction seems set for continued strong growth - there is a wealth of investment opportunities, and such forward indicators as we have clearly suggest this. The earlier strong upward trend in dwelling construction has been checked for the time being but an upturn there is likely before long.
Herein lies the core of our Budget problem, seen from the economic standpoint. With economic activity running, as it has been, and in all probability will continue to be, close up against the limit of resources, there is an inherent tendency for wages, profits and other forms of income to rise faster than output - on the one hand, giving rise to cost increases and, on the other, generating excessive demand. This is not just a matter of theory; it is borne out by a wealth of experience. Hence, in framing the Budget, we have had to assess most carefully its potential influence on the economy.
There could be no gainsaying the need for a large increase of expenditures in this Budget. From the analysis 1 shall make later it will be seen that all of the increases we propose are in the high priority class. But the Commonwealth’s expenditures, directly or indirectly, add to demand and we have had to scrutinise them carefully from that standpoint. We have also taken as mandatory a sizeable reduction in personal income tax - we propose to meet that obligation squarely and unequivocally. But the increase in disposable incomes that will ensue must tend to stimulate demand.
Plainly, economic prospects being what they are, the Government must ensure that, in its overall effect, the Budget does not give additional impetus to demand. Accordingly, we have avoided any significant acceleration in the rate of increase in domestic outlays and, as the cornerstone of our policy, 1 am bringing in a balanced Budget - indeed, one in which total receipts will more than cover total expenditure. As overseas expenditures this year will again greatly exceed overseas receipts, this Budget will produce a considerable surplus of domestic receipts over domestic expenditures. From the standpoint of impact on resources and liquidity that will be all to the good.
It may be said that we could equally have achieved the same Budget result by drastic pruning of expenditures or by postponing personal income tax reform. We do not believe these were practicable alternatives. We have chosen instead to pursue high priority objectives on the expenditure side and to do something decisive on personal income tax; to make this possible, we have decided to introduce a number of taxation measures, which I shall outline presently. Here I may say that they are of kinds that, in general, should have a steadying effect on spending.
page 11
THE EXPENDITURE ESTIMATES
Total expenditure this year is estimated at $7,883m, an increase of $795m or 11.2%. The increase last year was $5 19m or 7.9%. More important for the domestic economy, however, is the fact that the rate of increase in domestic outlay this year - estimated at 11.4% - is not greatly above the increase of 10.7% last year.
The prospective increase in expenditure this year owes much to the fact that, particularly over the last 12 months, the Government has entered into a number of major new commitments. Notable amongst them are the new and much liberalised financial arrangements with the States, but other examples include the improvement of the health scheme, introduction of the tapered means test, and measures to assist primary producers.
All of these increases have importance for the economic and social wellbeing of the community. But having already undertaken these large commitments, we could not, responsibly, put forward further” large expenditure proposals at this juncture. Accordingly, the new expenditure proposals which I shall announce presently are estimated to add no more than about $70m to our expenditures this year. As usual, detailed analyses of the estimates are to be found in statements attached to the Budget Speech.
Payments to the States
Outstanding in this year’s estimates is the very large increase in payments to the States. These payments, including the funds required for the State works and housing programmes, are estimated at no less than $2,708m or $29 lm more than last year.
They will absorb one-third of this year’s Budget and account for more than onethird of the estimated increase of $795m in our total expenditures this year. This represents a massive diversion of the nation’s material resources to help meet the needs of the State Governments.
An important factor in this increase is the new financial assistance arrangements we have entered into with the States and which commence this year. These will give the States $70m more Commonwealth assistance in 1970-71 than if the previous arrangements had continued. The financial assistance grants are estimated to increase by approximately $170m in 1970-71. A further $10m will be added to these grants under an agreement we have reached with the Premier of Tasmania whereby Tasmania’s special grant for 1970-71 will be correspondingly reduced. We shall also be meeting debt servicing charges on $200m of State debt this year at a cost of $12m, and on a further S200m of State debt in each of the next 4 years. This will lead to the formal transfer of $ 1,000m of State debt to the Commonwealth in June 1975.
It was agreed at the recent Loan Council meeting that the State works and housing programmes should be increased this year by $65m, thus bringing them to $823m. Within this figure, the Commonwealth will be providing, for the first time, an interest-free grant of $200m that will help to relieve the States of debt charges on their non-revenue-producing works.
Other specific purpose payments to the States are estimated at $539m or $69m more than last year; these cover a wide variety of both revenue and capital payments, including SI 2m for drought relief assistance to Queensland in continuation of the widely extended measures introduced last year. The Commonwealth will also as usual give sympathetic consideration to any further approaches the States may make for assistance of this nature where the cost involved would place an undue burden on their finances. Over the past 5 years the Commonwealth has provided the States with drought relief assistance totalling $94m.
Much has been said in the past year about the working of our Federation. May I suggest that the very magnitude of the provision we are makins in this Budget for addi tional payments to the States is proof of our real desire to ensure effective working of the Federation.
Defence
The Defence Vote proposed is 4 1,1 3 7m which is 3.1% greater than the 1969-70 expenditure of $l,103m. Defence expenditure overseas - estimated at 1.233m - will be about the same as last year.
During the past year, our national security policies have had particular and continuing attention from the Government. The challenge they present is that of understanding the changes occurring in international relationships, especially as they affect South East Asia and Australia, and cf developing defence policies which will serve us in the strategic circumstances of the future. Perception of the long term - indeed of the very long term - is necessary when ordering weapons systems and developing the infrastructure for our forces.
The estimates contain some provision for expenditure on major capital equipment projects for the Services announced in the Budget Speech last year and by the Minister for Defence in March but the full impact of expenditure on these projects will not be felt until next financial year or later. Other major items of equipment are under study. Provision is made for expenditure of $13m in 1970-71 for the lease of 24 Phantom aircraft from the United States Government. Major works projects include the RAN receiving station at Darwin, the continued development of the Army Aviation Centre at Oakey in Queensland and the development of the airfield at Learmonth in Western Australia.
It is planned to increase the strength of the Permanent Forces during 1970-71 by about 1,400. These additional personnel are required to man new ships and aircraft coming into service, meet operational commitments and provide supporting elements in Australia. Conditions of service are under review and several adjustments in these conditions have already been made.
As to Vietnam, progress in the general security situation has been such that, as announced by the Prime Minister earlier this year, the Government has decided that one Australian infantry battalion and some supporting personnel will be withdrawn. It is planned that this will take place within the next few months.
In respect of our forces in Malaysia and Singapore, we are continuing to develop arrangements required by the situation where British force dispositions are being greatly altered. Our planning is being coordinated with the defence policies of the British Government which has pledged itself to retain some forces in the area after 1971 as a contribution to regional security. An amount of 55.5m m be provided this year under the current programme of defence aid to Malaysia and Singapore, while defence aid for South Vietnam in 1970-71 is estimated at S3. 3m.
Social Welfare
Next to our payments to the States, the largest element in the prospective increase in our expenditure this year is welfare. These expenditures on social services, health services, repatriation, and housing benefits are estimated to increase by $157m to SI, 820m. Details are given in Statement No. 10. Of this increase, about $31m relates to decisions I shall detail presently, t further $35m arises from recent modification of the health scheme and about $35m from the full-year effects of various measures announced in the 1969-70 Budget or introduced during 1969-70. The balance is due to normal growth in expenditures arising from existing commitments. age, invalid, widows’ and service pensions
The Government proposes to increase the maximum rates of all age, invalid and widows’ (tensions by 50 cents a week. This will mean that, in terms of the maximum weekly rate of pensions, a married couple who are both pensioners will receive $27.50 a week. When they are living apart because of illness or infirmity they will receive $31 a week. A single pensioner will receive $15.50 a week. A widow with one child will receive at least $22 a week and a widow without children $13.75 a week. In addition, supplementary assistance of up to $2 a week is payable to each eligible pensioner. Persons in receipt of service pensions - which are repatriation benefits - will receive similar pension increases. So will tuberculosis sufferers in receipt of allowances :.nd handicapped persons in receipt of sheltered employment allowances. sickness benefits
The rate of sickness benefit for adults, married minors and minors without a parent in Australia will be increased after 6 weeks to $15.50 a week, that is, equivalent to the standard rate of invalid pension. The benefit rate to apply after 6 weeks in the case of an unmarried minor will be $10 a week. In addition, a supplementary allowance of $2 a week will be paid where the beneficiary pays rent and is entirely or substantially dependent on his benefit. Persons who are in hospital and have no dependants will not qualify for these increased and additional benefits. sheltered workshops
Sheltered workshops incur additional costs in providing training and supervisory staff, doctors, social workers, counsellors and others necessary to help handicapped employees overcome their disabilities. A $1 for $1 subsidy will be paid towards the salaries of staff engaged to provide these special services;. lt is also proposed to encourage sheltered workshops to graduate more of their employees to work in open industry by paying the organisation a training fee of $500 for each eligible employee who is placed in open employment for nol less than 12 months. This payment will also serve to compensate sheltered workshops for the considerable time and effort spent in training handicapped workers.
It has been found that inability to obtain suitable residential accommodation is one reason why some handicapped people are unable to accept normal employment, lt is therefore proposed to extend the $2 for $1 capital subsidy now available towards the cost of hostels for handicapped people in sheltered employment, to hostels for those disabled persons who are able to engage in normal employment but still require special accommodation. repatriation benefits
We propose a number of improvements in repatriation pensions and benefits.
The totally and permanently incapacitated war pensioner is (o receive an increase of $2.00, to raise the pension to $38.00 a week.
The intermediate rate war pension, payable to those able to work only part-time or intermittently because of a war-caused disability, will be increased by $1.50 to $28.00 a week.
The special compensation allowance, payable to certain of the more severely disabled general rate pensioners, will be increased. The increase is to be $1.00 a week for those eligible at the 100% level, grading down to 75 cents at the 75% level. The allowance at the 100% level will be $6.00 a week, bringing the combined payment of allowance and general rate war pension to $18.00 a week for most of those receiving pensions at the 1 00% rate.
Benefits for war widows are to be increased. The pension for war widows is to rise by 50 cents to $15.50 a week, and the domestic allowance that is payable to most war widows will also be increased by 50 cents, to $8.00 a week. The new maximum level of combined benefits for eligible war widows will thus be $23.50 a week.
War pensions payable for children of exservicemen who have died as a result of war service are to be increased by 60 cents to $6.00 a week for the first child and by 75 cents to $5.00 a week for the second and each subsequent child. The rate for a double orphan, that is, a child who has lost both parents, will be increased by $1.85 to $12.00 a week. mental health institutions
The Government has decided to continue for a further 3 years from 1 July 1970 the provision of assistance towards capital expenditure incurred by the States on mental institutions. The Commonwealth assistance will remain on the basis of one-third of the total expenditure by the States on approved projects. home nursing subsidy
The Government intends to increase, from I September, the subsidy at present payable to approved organisations providing home nursing services. For organisations established before September 1956, the annual subsidy for each nurse over and above the number employed at 30 September 1956 will be increased from $2,600 to $3,200. For organisations formed after that date, the subsidy for each nurse employed will be increased from $1,300 to $1,600 a year. As at present, the amount of Commonwealth subsidy payable to an organisation will not exceed the amount of
State assistance received by that organisation.
Education
The Commonwealth continues to make a significant contribution to the expansion and improvement of Australia’s education services. The greatly improved system of general revenue grants to the States over the next 5 years should enable them to do much more for education which is, of course, one of their major activities. Besides this indirect assistance, Commonwealth expenditures specifically related to education are expected this year to exceed $3 12m - which would be an increase of $63 m or 25%.
Much of this Commonwealth expenditure takes the form of specific purpose payments to the States. These are expected to rise this year by 29% from $148m to about $191m. The principal items in this category will be - payments for universities $78m; for the developing colleges of advanced education $35m; for special purpose unmatched grants for school facilities, technical colleges and teacher training colleges $48m; and for per capita grants towards running costs of independent schools $24m.
Schools and technical colleges in the Australian Capital Territory and the Northern Territory will together receive almost $30m, while grants to the Australian National University and to the Canberra College of Advanced Education will be about $30m and $5m respectively.
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SCHOLARSHIPS
The programme of Commonwealth scholarships continues to expand; this year there are 61,000 students holding these awards in tertiary, technical and secondary institutions. For 1971 the number of open-entrance university scholarships will be increased by 1,000 to 8,500, in addition to the present 4,000 later-year university awards and 2,500 advanced education awards. In 1971, the number of post-graduate awards for research training will be increased by 50 to 700 and a new category of post-graduate awards for course work leading to masters degrees will be created; there will be 100 of these new awards in 1971. In addition, a number of scholarships will be available to students who enter the new teacher education courses at the Canberra College of Advanced Education when these commence in 1971.
External Aid
All told, the Government will provide over $200m this year Cor external aid. Details are given in Statement No. 8. The basis on which financial assistance will be provided to Papua and New Guinea this year has been changed to accord with the recent arrangements to transfer greater responsibility and control over expenditures to elected Ministerial Members and the Administrator’s Executive Council in the Territory. The estimates envisage an additional $1 1.2m for economic aid to Papua and New Guinea as well as increased aid to various other countries - including in particular Indonesia, South Vietnam, Cambodia, Thailand and the islands in the South Pacific. During the current session legislative authority will be sought for an Australian contribution to the value of $US10m over the next three years to the Special Funds of the Asian Development Bank.
Australia again ranked among the fi rsl three donor countries in the world in 1969 in terms of the percentage of gross national product devoted to official development assistance to poorer countries.
Assistance to Industry
Commonwealth assistance to industry takes a variety of forms including payments to industry, special taxation concessions, and contributions to promotion and research. Last year, Commonwealth assistance under these three heads amounted to $493m of which payments to industry accounted for $191 ni. Further details are given in Statement No. 9.
Commonwealth payments to or on behalf of industry are expected to reach $272m in 1970-71, $81m more than last year Industrial research and development grants are expected to total $17m, a rise of $8m. Net expenditure by way of subsidy to shipbuilding is estimated at $17.6m.
Expenditure relating to rural industries is estimated at $2 15m, $77m more than last year. A payment of $30.5m in respect of exports from the 1968-69 wheat crop is expected to fall due late in the year. No such payment was necessary last year. Under revised arrangements announced in June by the Minister for Primary Industry, bounties on dairy products are estimated to cost $45m in 1970-71, $ 17.5m more than in 1969-70. There will be a partly offsetting decrease of $7m in payments of devaluation compensation to the dairy industry. Devaluation compensation payments to other rural industries are expected to decrease by Sim. Subsidies to lower the prices of phosphate and nitrogenous fertilisers are expected to cost S56.5m.
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ASSISTANCE TO WOOLGROWERS
Woolgrowers’ income fell steeply in 1969- 70 because of lower prices for wool and, in some areas, because of drought. Those growers particularly affected by these circumstances, and who are heavily dependent on income from wool, are to be assisted by a one-year scheme of emergency relief. Within a total amount of $30m, the Commonwealth will make payments to woolgrowers based on the fall in their gross proceeds from wool between 1968-69 and 1969-70 beyond a certain percentage, and subject to a number of conditions. Details will be announced shortly by the Minister for Primary Industry.
The scheme is regarded as an interim measure pending consideration of other possible action appropriate to the longer-term problems of the woolgrowing industry. In particular, the Government is examining the need for reconstruction in the wool industry, including as one aspect of reconstruction the question of growers’ indebtedness, and of ways in which the Commonwealth can most effectively assist. The Minister for Primary Industry will submit a report to the Government on these matters. The Government will also examine all aspects of the setting up and operation of the proposed statutory wool marketing authority. These investigations will be pursued as matters of urgency.
Provision is made for Commonwealth expenditure of $2.9m in 1970-71 towards costs of handling and brokers’ administration charges relating to the price averaging plan that the Australian Wool Marketing Corporation Pty Ltd has now commenced to operate. In addition, the Commonwealth has offered to meet for three years any losses incurred by the Marketing Corporation on resale of wool purchased at the end of a price averaging period.
The selling of wool by samples, the properties of which would be scientifically measured and made known to buyers before sale, is considered to offer the prospect of substantial economies for the woolgrowing industry. We have decided to support a programme of research and trials on pre-sale objective measurement of wool. The estimated cost over a period of about 2 years is nearly SI. 5m, of which about $650,000 will be spent in 1970-71. Commonwealth contributions towards the costs of wool promotion and research in 1970-71 are expected to total $29m, compared with $13m in 1969-70; growers’ contributions have been reduced, as from 1 August 1970, from 2% to 1% of the value of wool sold.
The Government has also agreed in principle to guarantee approved borrowings by the Australian Wool Board for the construction and equipping of integrated wool selling complexes.
Advances for Capital Purposes
It is estimated that advances for capital purposes will amount to $443m, an increase of $78m.
A large part of this increase comprises an estimated rise of $52m in advances to Qantas Airways Limited and the Australian National Airlines Commission. These advances are required mainly for the airline reequipment programmes and are expected to be financed from loans raised overseas foi this purpose.
New items in this year’s estimates include $25m as an initial capital subscription to the Australian Industry Development Corporation and SS00.000 as working capital for the new Snowy Mountains Engineering Corporation.
An amount of S2.4m is provided for expenditure by the Australian Atomic Energy Commission in connection with the proposed nuclear power station at Jervis Bay. A further amount may be required later in the year should there be expenditure under major construction contracts.
A provision of S60m has been made for War Service Homes, an increase of $5m over the amount provided last year.
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POST OFFICE
An amount of $240m - $7m more than last year - will be provided to the Post Office to help finance expansion and renewal of facilities. Towards the same purpose the Post Office expects to provide $168m from internal sources - mainly de preciation funds - making a total for capital requirements of $408m.
To avoid a Post Office loss this year, and to enable the Post Office to make its contribution to financing the desired capital programme, it is proposed to raise charges to increase receipts by about $42m in 1970-71 and about S53m in a full year. The proposed increases cover postal charges, telephone rentals, the telephone connection fee and charges for certain other services. The Postmaster-General will presently give further details.
Even with the increased charges proposed it is expected that postal services will incura loss this year. Telecommunication services are expected to produce a profit of which part will offset the loss on postal services and part will help to finance capital expenditures.
Post Office policy on the provision of telephone services in country districts has been reviewed. With effect from January 1969 the Post Office will provide rural subscribers with a greater length of line than previously, so reducing the amount subscribers are required to finance. The Postmaster-General will also make a statement in more detail on this.
Other Capital Works and Services
In 1970-71, expenditure on other capital works and services is estimated to total $247m, an increase of S54m or 28%.
Capital works in the Northern Territory are estimated to cost an additional $19m the year and capital works in the Australian Capital Territory an additional $12m.
Capital expenditure by Commonwealth Railways is expected to increase by $5m Construction of a standard-gauge line between Port Augusta and Whyalla will be commenced and expenditure on this project in 1970-71 is estimated at $3m. An amount of $230,000 is being provided to enable Commonwealth Railways to commence a detailed survey of the route for a new standard-gauge line between Tarcoola, on the Trans-Australian Railway, and Alice Springs. The Government has approved in principle the construction of this new line, which would replace the existing narrowgauge railway between Marree and Alice Springs. Construction of the new railway will be subject to the approval of the Government of South Australia.
Other Expenditures
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ABORIGINAL ADVANCEMENT
We propose to provide $ 10.4m for special Aboriginal advancement programmes in 1970-71. After taking account of the balance in the Aboriginal Advancement Trust Account, an amount of $11.3m will be available for expenditure this year on these programmes with particular emphasis on housing, health and education. This represents an increase of$3. 6m - 47% - over 1969-70 expenditure in this field. Within the total allocation of $ 11.3m, grants to the States will increase by 21% to $7m. married women training scheme
In accordance with the undertaking given in the Prime Minister’s Election Policy Speech provision has been made in the estimates for the introduction of a vocational training scheme for married women and adult single women who, because of changes in their domestic responsibilities wish to enter or re-enter the work-force. Details of this scheme will be announced shortly by the Minister for Labour and National Service. grants in support of performing arts
Grants in support of the Performing Arts will be increased by 45% to a total of $3.85m. The Australian Council for the Arts has continued to provide valuable assistance as the Government’s financial agent and adviser in this field. Details of the assistance to be provided in 1970-71 will be announced as soon as possible.
There are a number of other figures which will be of interest to honourable members but I feel it is not necessary to read them out here. Accordingly they will be incorporated in Hansard.
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THE REVENUE ESTIMATES
I turn now to the revenue estimates for 1970-71 and the measures for raising more revenue that I mentioned earlier.
On the basis of existing rates of taxation it is estimated that receipts in 1970-71 would total $7,922m, an increase of $840m or 11.9%. This estimate is based on the expectation that 1970-71 will see a continued strong rise in incomes and general buoyancy in spending.
I said at the outset that the Government judged the needs of the economic situation to be such that, overall, we should aim to balance the Budget - indeed to budget for a small surplus. To run significantly into deficit would be to step on the accelerator when the safe speed limit has already been reached.
Total expenditure in 1970-71 is estimated to be $7,883m. This is $39m less than the estimate of revenue I have just cited. But I have already said that the Government proposes to reduce personal income taxation at an estimated cost to revenue in 1970-71 of $228m. Especially on grounds of equity, we consider a reduction of this magnitude to be justified and we do not think it should any longer be deferred. Obviously, therefore we have to raise additional revenues if a balanced budget, which I have described as the corner-stone of our policy, is to be achieved.
At this point also I wish to state that the Government will introduce, as part of the Budget, legislation to impose receipts duties, the revenue from which will be for the benefit of the States. The history of these receipts duties is well known to Honourable Members. It should be enough for me to say here that, unless receipts duties are imposed by Commonwealth legislation, there will be a heavy loss of revenue to the States with crippling effects on State Budgets.
Customs and Excise Duties
We propose to increase the rates of customs and excise duty on cigarettes and cigars by 50 cents per lb and on manufactured tobacco by 20 cents per lb. It is estimated that these increases in duty will yield $20m in 1970-71 and $31m in a full year.
Along with tobacco, alcoholic beverages have been a traditional source of revenue both in Australia and in many other countries. In Australia, however, there has been one type of alcoholic beverage which, with a minor exception, has not been subject to excise duty at all. I refer here to wine. Consumption of wine has been rising strongly from year to year and, in the light of this trend the evident profitability of wine production and the heavy taxation levied on other forms of alcoholic beverage, we have decided that a moderate excise duty of SO cents per gallon should be placed on locally produced grape wine and that there should be a corresponding increase of SO cents per gallon in customs duty on imported wine. This is equivalent to a duty of just over 8 cents a bottle. The excise duty will not be levied on small amounts of wine produced by home wine producers’ for their own use. Concurrently, we propose to remove the duty on spirit used to fortify wine. It is estimated that these customs and excise duties on wine will yield $ 12.7m in 1970-71 and $15.2m in a full year. The removal of duty on spirit used to fortify wine is expected to reduce revenue by $850,000 in 1970-71 and $lm in a full year.
Finally, within the customs and excise field, we propose to increase duties on certain petroleum products currently subject to excise duty. Demand for petroleum products has been growing strongly. Moreover, I think it is fair to say that the taxation of such products in Australia is much lighter than in most comparable countries. We propose to increase by 3 cents a gallon the excise and customs duty on motor spirit, automotive distillate used in road vehicles operating on public roads, aviation turbine fuel and aviation gasoline. The yield in 1970-71 is estimated at $63 m and in a full year at $79.6m.
Sales Tax
The Government has decided to increase the rate of sales tax on goods currently in the 25% class to 274%. Cars and station wagons, radios, television sets, etc., are the principal goods affected. The estimated increase in revenue in 1970-71 is $23m and. in a full year. $29m.
Company Tax
In 1969-70, company income increased by about 14%. As in the two previous years, this was a faster increase than occurred in total wages and salaries. During 1969-70 also, non-farm business investment increased faster than consumer spending and competed particularly vigorously for available resources.
The Government appreciates that gains in productivity depend in large measure on business investment and that prospects of good profits have a big part in incentives to investment. Nevertheless, in current circumstances in which investment opportunities abound and profits are generally high, we think it reasonable to levy a higher tax on company profits and thus help to raise revenue to bring the Budget into balance. This will, moreover, spread more widely throughout the community the benefits of the generally profitable outcome of companies’ operations.
Our proposal is to add 2.5 cents in the dollar to the rates on taxable incomes of companies. The general company tax - on all except the first $10,000 of taxable income - would then become 47.5 cents in the dollar for public companies and 42.5 cents for private companies. It is estimated that the proposed increases, which will apply to incomes derived by companies during the income year 1969-70, will add $76m to revenue in 1970-71.
I might add that the investment income of a superannuation fund that does not invest a sufficient proportion of its assets in public securities is taxed at the same rates as the mutual income of a life insurance company. As the latter rates are being increased by 2.5 cents in the dollar, the rates for a superannuation fund whose investment income is taxed in 1970-71 in this way are being increased by a corresponding amount.
Miscellaneous Charges
The licence fee for radio communication services, licensed under the Wireless Telegraphy Act, has remained unchanged at $2 a year since 1924. Proposed increases in the fee for most services, to either S6 or $10 a year depending on the type of service licensed, are expected to yield additional revenue of $460,000 in 1970-71 and $620,000 in a full year. The PostmasterGeneral will give details in a separate statement.
To help meet the rising cost of providing marine navigation aids, it is proposed to increase charges to shipping - known as light dues - from 18 cents to 20 cents per net registered ton per quarter. This is expected to yield additional’ revenue of $450,000 in 1970-71 and $600,000 in a full year.
In accordance with our policy that the air transport industry should progressively meet a greater proportion of the costs incurred in providing and operating airports and airway facilities, it is proposed to increase air navigation charges by 10%, with effect from January 1971. The increased charges are expected to yield additional revenue of $850,000 in 1970-71 and SI. 8m in a full year.
Personal Income Taxation
The increases in taxation and charges 1 have outlined are expected to yield, in total, $196m in 1970-71 1 now come to personal income taxation.
On other occasions the Government has expressed its concern at the way in which the present graduated rate scale has shifted a growing share of the weight of taxation on to personal income taxpayers. Between 1960-61 and 1969-70, for example, the proportion of our total revenue collected by way of pay-as-you-earn collections from wage and salary earners increased from 20% to 29%. In his Policy Speech last year, the Prime Minister stated our intention to improve the situation and the GovernorGeneral also referred to this matter in his speech at the opening of Parliament last February.
With rising incomes the present scale has brought about a relatively rapid increase in personal income taxation. The revenue so obtained was needed to meet our commitments, but there is no doubt that, in the process, inequity has grown into the system. In real terms there have been increases in effective rates of tax at most levels of taxable income, but the increase has not been the same at all levels, and that is the particular source of inequity which concerns us.
To provide relief on a equitable basis it has been necessary to prepare a new general rate scale. As is at present the case, tax payable will be the sum of the amounts calculated at the general rates and a 2i% levy. Tables will be made available in which tax payable under the new and the old scales is compared at various levels of taxable income. The new rates will apply to 1970-71 incomes and a new scale of tax instalment deductions from wages and salaries will operate from 1 October 1970.
On taxable incomes up to $10,000 there will be a reduction of some 10% in tax payable. Above $10,000 the percentage reduction in tax will taper off, reaching 4.4% at $20,000 and cutting out altogether at $32,000.
In deciding on this kind of revision, we have had regard to the way in which the incidence of the effective burden of tax has been altered by past rises in incomes. Effective tax rates have increased more on lower and middle incomes than on higher incomes, and in giving some relief from the effects of the past trends, there is a clear case for ensuring that most of the relief will go to lower and middle income earners. In the result there will be increases in the takehome remuneration in the income ranges where it is most needed. This should serve to strengthen incentives for people in those groups; this is an objective to which we attach great importance.
For some time past, we have had the whole of our taxation system under close review, lt became quite apparent at an early stage of that review that we should give first priority to relieving the burden of income tax on the middle and lower income groups. Now that we have honoured our promise to do this, we shall be looking in more detail at other aspects of our taxation system.
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AGE ALLOWANCE
We propose to increase the relief given through the income tax age allowance to residents of Australia who are of qualifying age, that is, sixty-five years for men and sixty for women. At present no tax is payable by an aged person whose taxable income does not exceed $1,300 or by a married aged person unless the combined taxable income of husband and wife exceeds $2,262. In line with the proposed increase in maximum pension rates, these exemption levels will be raised to $1,326 and $2,314 respectively. Some further relief will also be given by adjustments to the ‘shading-in’ arrangements which limit the tax payable by an aged person with a taxable income somewhat greater than the exemption level. The changes in the age allowance are estimated to cost $2m in 1970-71 and $3m in a full year.
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THE BUDGET AND THE ECONOMY
Let me now sum up the Budget. After bringing to account the changes in taxation and charges I have described, total receipts in 1970-71 are estimated to be $7,887m, or 11.4% more than last year. Since total expenditure is estimated at $7,883m the Budget shows a surplus of $4m.
Within this overall result there would, on present figuring, be a surplus of domestic receipts over domestic expenditure of the order of $550m which would be about $50m greater than the actual domestic surplus in 1969-70. lt is of course not possible, at this early stage of the financial year, to predict with certainty and precision what the ruling trends and events will be through the months ahead. We know something of the forces now at work in the economy and can form judgments as to their future strength and duration. But other forces and tendencies not now evident are bound to emerge and assert themselves in one direction or another as time goes on. For these reasons it would be rash to claim that the Budget will prove to be exactly suited to the requirements of the Australian economy through 1970-71. In any case, strong and pervasive though its effects can be, the Commonwealth Budget does not determine the whole course of our economic affairs. A multitude of initiatives and decisions on the part of others have a share in that. In particular, excessive demands for increases in money wages and other incomes - especially when pushed ruthlessly in conditions of full employment - could jeopardise prospects of balance growth. There is a need for responsibility and realism on the part of all in the community here; the problem of containing costpush inflationary pressures is a large one confronting all Western economics and it cannot be tackled effectively if there is not a general will to do so. Certainly, no Budget framed consistently with a full employment policy can do the whole joh.
That being said, however, in the light of our present knowledge we have formed the view I have described earlier as to prospects for the year and have shaped our budgetary scheme accordingly. In general, we see the probability of further strong growth, the one exception to this being the rural sector where highly adverse conditions could to some extent offset the rise in both output and demand which is likely to occur elsewhere. There has been some check in recent months to the over-expansive conditions of the preceding period. We do not want those conditions to return - as they undoubtedly could in the absence of restraint.
Whilst, therefore, we are in no sense trying, through the Budget, to slow down the rate of growth, we are seeking to ensure that the Budget will not add impetus to demand in general. We do not think it will. Domestic outlays have been kept to much the same rate of increase as last year while the net effect on demand of the taxation changes will not be significant. Moreover, we calculate that the domestic surplus for which it provides will work against the development of excessive liquidity. Perhaps 1 could put it we have sought to make this a precautionary Budget but not a repressive one.
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CONCLUSION
Implicit in these financial proposals is a belief that we now have a unique opportunity in Australia to promote not only strong growth but continuous growth, varied, rich and self-enhancing growth. It must be the highest aim of economic policy to preserve and develop that opportunity. In introducing a balanced Budget we have kept firmly in mind the need to help create conditions under which sound economic growth may proceed.
In this Budget we have sought to assess the needs of the nation as a whole. In doing so, we have made provisions which secure to the State Governments a larger and growing share of our gross national product. At the same time this Budget helps to achieve other great national objectives in important areas such as defence, social welfare and the economic welfare of industry - including our great woolgrowing industry that is currently beset by special problems.
Finally, we have made a great effort in this Budget to provide substantial income tax relief to those in the lower and middle income groups. In doing so we have been concerned both to relieve the inequity which had developed and to stimulate initiative, thus promoting conditions which are significant also for our future economic growth. The opportunities are there if we all accept our responsibilties as members of this society.
I commend the Budget to honourable members.
page 21
STATEMENT No. 1 - BUDGET ESTIMATES, 1970-71
The Budget estimates for 1970-71, in ‘conventional’ terms provide for: - an increase of $795 million, or 11.2 per cent, in Commonwealth expenditures, following an increase of $519 million, or 7.9 per cent, in 1969-70; an increase of $806 million, or 11.4 per cent, in Commonwealth receipts, after allowing for new revenue measures announced in the Budget Speech, which are estimated to reduce receipts by a net $34 million in 1970-71. In 1969-70 Commonwealth receipts increased by $897 million, or 14.5 per cent, and that increase included the effects of measures announced in the Budget Speech for 1969-70 which were estimated to reduce receipts by a net$14 million in that year; and
In national accounting form, the estimates imply: -
In 1970-71 it is estimated that the *domestic* surplus will increase by about $50 million to about $550 million; in 1969-70 the domestic surplus increased by about $300 million to $500 million.
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#### The Economic Context
The Budget for 1970-71 has been prepared in the expectation that consumer and private business spending will continue to increase strongly in 1970-71. It is expected that gross national product at constant prices will increase at about the same rate in 1970-71 as in 1969-70.
In 1969-70 gross national product at constant prices increased by 5.5 per cent. There was continued very vigorous expansion in the gross product of the non-farm sector, but a setback in the rural sector was a retarding factor in the overall growth of the economy. Nonetheless, the economy's growth rate in 1969-70 was about the same as the average achieved in the preceding five years.
Estimates of the main components of gross national product and gross national expenditure in 1969-70 are given in detail in the document 'National Income and Expenditure, 1969-70' presented with the Budget Papers. In current price terms, these estimates show the following main changes from 1968-69: an increase of 10.7 per cent in gross national product at factor cost, comprising an increase of 12.6 per cent in the gross value of non-farm product and a decrease of 8.4 per cent in the gross value of farm product; an increase of 9.2 per cent in gross national expenditure, including increases of 9.6 per cent in personal consumption, 14.6 per cent in private gross fixed investment in housing, 8.0 per cent in other private gross fixed investment and 8.3 per cent in public expenditure on goods and services; and a decrease from $359 million in 1968-69 to $11 million in 1969-70 in the excess of imports over exports of goods and services.
Also in 1969-70:
{: type="i" start="1"}
0. the growth in money wages and prices steepened;
1. the labour market tightened, although there was a moderate easing in the June quarter;
2. monetary stringency and higher interest rates had some effects in steadying down surging demand towards the end of the year - the effects were most notable in dwelling construction;
3. there was an exceptionally large increase in exports.
In 1970-71 gross national product at constant prices seems likely, on present indications, to increase by about 5.5 per cent. Average employment in 1970-71 is expected to increase by a little more than 3 per cent; the rise in non-farm productivity is expected to be a little less than 3 per cent. As usual, considerable uncertainty attaches to the likely course of farm output but this forecast takes account of the recent deterioration in seasonal conditions. The forecast increase in gross national product is in line with the strengthened underlying rate of growth evident in the economy in recent years.
Demand seems set to rise strongly in 1970-71. In the light of recent and prospective trends in personal disposable income, consumer spending seems likely to continue buoyant in the year ahead. Gross private fixed investment on plant and equipment and on nonresidential building and construction is expected to continue to rise strongly. Gross private fixed investment in dwellings is expected to reverse its recent easing tendency as the current half-year goes on. The financial position of the State sector will facilitate a very substantial lift in its current and capital expenditures.
In recent years the rate of increase in average weekly earnings has accelerated from year to year; it has been assumed, however, that in the current year the rate of increase will be less than in 1969-70. Nonetheless, the rate of increase assumed for the purpose of setting down a figure for pay-as-you-earn tax collections (7 per cent) is a very high one reflecting, in part, the high level *already* attained by average weekly earnings in relation to their average level in 1969-70.
Increases in Budget expenditures, including payments to the States and provisions for additional benefits and services in the various fields referred to in the Budget Speech, will contribute substantially to the growth of demand and activity within the economy. The reduction in personal income taxation will also add to capacity to spend within the economy. In the light of prospective trends in public and private spending and after taking account of the proposed increases in Commonwealth expenditures and reduction in personal income taxation, excessive pressures on resources could be expected if a sufficient degree of counteraction to the expansionary effects of those Budget provisions was not taken. Accordingly, a range of taxation increases is provided for in the Budget to produce a small Budget surplus.
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#### Conventional* Budget Figures
The following table sets out in 'conventional* form the Budget estimates for 1970-71 and actual expenditures and receipts in 1969-70.
The estimates for 1970-71 include provision for the new expenditure proposals announced in the Budget Speech. These new measures account for about $70 million of the estimated increase in expenditure of $795 million in 1970-71. Of the balance, about $300 million arises from the full-year effects of measures announced in the 1969-70 Budget and new commitments entered into during 1969-70. Among the items in this latter class are the new financial assistance arrangements entered into with the States; the increase in State works and housing programmes and the associated introduction of capital grants to the States; the new medical benefits plan; and the establishment of the Australian Industry Development Corporation. The balance of the increase in expenditure, over $400 million, arises from commitments previously entered into by the Commonwealth.
The main elements in the estimated increase in expenditures in 1970-71 and in the actual increase in 1969-70 are as follows: -
The main feature of the expenditure estimates is the very large prospective increase in payments to or for the States and works and housing programmes, which are estimated to increase by $291 million, or over 12 per cent in 1970-71. These items together represent 34.4 per cent of Commonwealth expenditure - that is , about a third of the Commonwealth Budget. A major factor contributing to the large estimated increase in these expenditures in 1970-71 is the revision to the financial arrangements with the States and the increase in Loan Council borrowing programmes agreed to with the States.
The payment to the National Welfare Fund and expenditure on repatriation services is another large group of expenditures accounting for 22.7 per cent of total Commonwealth expenditures. They are estimated to total $1,786 million in 1970-71, an increase of $148 million, or 9 per cent. Measures announced in the Budget Speech are estimated to account for $29 million of this increase, the new medical benefits plan, which was announced during 1969- 70, for $35 million and the full-year effects of measures announced in the 1969-70 Budget for a further $30 million.
The increase in expenditure on defence services is estimated to amount to $34 million, or 3.1 per cent, bringing total expenditure in this field to $1,137 million in 1970-71. Expenditure on defence services is estimated to amount to 14.4 per cent of total Commonwealth expenditure in 1970-71.
Commonwealth payments to industry are estimated to increase by $81 million, or 42.3 per cent. The proposal announced in the Budget Speech to provide emergency assistance to wool growers is estimated to cost $30 million in 1970-71, increased assistance to the dairy industry announced during 1969-70 is estimated to cost an additional net $11 million in 1970- 71 and it is estimated that a payment of $31 million will be made to the Wheat Industry Stabilisation Fund in respect of the 1968-69 wheat crop. Further information on Commonwealth payments to industry is set out in Statement No. 9.
Advances for capital purposes are estimated to increase by $78 million, or 21.3 per cent, to $443 million. Advances to the Australian National Airlines Commission and to Qantas Airways Limited, mainly for expenditure on aircraft, are estimated to increase by $52 million. Provision has been made for an initial contribution of 125 million towards the capital of the Australian Industry Development Corporation. The amount to be advanced to the Post Office is estimated to rise by $7 million.
Further details of the 1970-71 estimates of expenditure are given in Statement No. 2.
Before taking into account the proposed revenue measures, total Commonwealth receipts are estimated to increase by $840 million, or 11 .9 per cent, to $7,922 million in 1970-71. Though this estimated increase is smaller than the increase in Commonwealth receipts in 1969-70- actual receipts rose by $897 million, or 14.5 per cent, in 1969-70- it is a high rate of increase by comparison with most previous years. The assumed increases in average earnings and employment are expected to produce another large increase in pay-as-you-earn instalment deductions at existing rates of tax and continued growth in private expenditure is expected to result in increased collections of the indirect taxes. Income tax collections in 1970-71 at existing rates of tax, will reflect the large increases in the incomes of companies and of individuals in business, the professions, etc. - with the notable exception of primary producers - which occurred in 1969-70.
The proposed revenue measures announced in the Budget Speech are estimated to reduce receipts by a net $34 million in 1970-71 and a net $54 million in a full year:
After taking account of the effects of these proposed changes, total Commonwealth receipts are estimated to amount to $7,887 million, which would be $806 million, or 11.4 per cent, greater than in 1969-70.
Further details of the estimates of receipts are given in Statement No. 3.
Budget Estimates in National Accounting Form
The estimates in national accounting form are set out in detail in Statement No. 6 and in the Supplement to the Treasury Information Bulletin which accompanies the Budget documents. The following table contains a summary of the main Budget aggregates in national accounting form.
Commonwealth outlays *overseas,* which declined by 13.8 per cent in 1969-70, are estimated to increase by 10.1 per cent in 1970-71.
*Domestic* outlays, which tend to add to demand within the economy, are estimated to increase by 11 .4 per cent, slightly more rapidly than in 1969-70.
On the basis of existing rates of taxation and other charges, total receipts, in national accounting terms, are estimated to rise by $849 million or 11.9 per cent in 1970-71. The new measures proposed in the Budget are estimated to reduce receipts by a net $36 million in 1970-71 and a net $57 million in a full year. After taking these measures into account, total receipts are estimated to increase by $814 million or 11.5 per cent in 1970-71.
Economic prospects as seen prior to the Budget are affected by new measures but not by the increase iti receipts at existing rates of taxation - the latter would be built into any pre-Budget assessment of prospects. The *net* effect of the new revenue measures proposed in this Budget on aggregate spending is, however, expected to be very small.
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#### The Estimated Budget Outcome
In both the 'conventional' classification and the national accounting classification it is estimated that Commonwealth receipts will exceed expenditures by $4 million in 1970-71. In 1969-70 there was a small deficit of $7 million. lt is estimated that the net result of Commonwealth receipts and expenditures *within* Australia will be a surplus of about $550 million in 1970-71, or about $50 million more than in 1969-70. Unlike 1969-70, however, it appears that, as a result of other factors, there will be a relatively large build-up in liquidity by the end of the first half of 1970-71 so that, though the Commonwealth's domestic financial transactions will again draw in funds in the latter half of the year, this should lessen the possibility of severe monetary stringency towards the end of this period.
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page 26
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### STATEMENT No. 2- ESTIMATES OF EXPENDITURES, 1970-71
In 1970-71, it is estimated that Commonwealth expenditures will increase by $794,846,000 or 11 .2 per cent to $7,882,708,000.
The estimates for 1970-71 are compared in summary form with actual expenditures in 1968-69 and 1969-70 in the following table.
Tables setting out the composition of the various items of expenditure and notes on the main variations follow.
Total expenditure on Defence Services is estimated to increase in 1970-71 by a net (33,928,000, or by 3.1 per cent. Estimated increases in expenditure include $30,132,000 for pay and salaries, $12,841,000 for increased stores for the R.A.N, and R.A.A.F. and $7,458,000 for accommodation and technical facilities.' The estimated increase in expenditure on pay and salaries reflects the cost of 1969-70 awards, determinations and approvals and the forecast increases in the strengths of the Permanent Forces arid civilian staffs of departments in the Defence Group. Expenditure on Naval ship construction is estimated to decrease by 818,977,000, expenditure on arms, armament and equipment for the Army by $12,125,000 and expenditure on the purchase, manufacture and lease of aircraft for the R.A.A.F. by $8,226,000.
Provision has been madefor estimated increases in the strengths of the Permanent Forces, as follows:
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#### Defence
Salaries are estimated to increase by $1,120,000; this is mainly attributable to a forecast increase in civilian staff and to the full year effect of Public Service salary increases awarded in 1969-70. The estimate for defence aid is $8,804,000 as compared with expenditure of $8,203,000 in 1969-70. While a decrease of $2,703,000 is estimated in defence aid to Malaysia and Singapore, reflecting a tapering off of projects within the current programme of defence aid for these countries, the estimates for 1970-71 include a provision of $3,304,000 for defence aid to South Vietnam. The reduction of $2,745,000 in expenditure on accommodation and technical facilities is mainly on account of the approaching completion of construction of facilities for the Joint Defence Space Research Facility near Alice Springs.
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#### Navy
Expenditure on pay and salaries is estimated to increase by $6,920,000, and expenditure on aircraft purchase and manufacture by a net $6,123,000 including part of the cost of purchasing ten additional Skyhawks from the United States Navy. A deposit of $400,000 has also been provided for two HS748 aircraft to be purchased during 1970-71 for the R.A.N. Expenditure on accommodation and technical facilities is estimated to increase by a net $949,000, including increases of $914,000 for expenditure on new works proposals and $579,000 on repairs and maintenance.
The estimated decrease of $18,977,000 in expenditure on Naval construction reflects the approaching completion of the current shipbuilding programme. The new programme, which includes five new Naval vessels, will not entail large expenditure this year.
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#### Army
Expenditure on pay and salaries is estimated to Increase by $12,435,000 mainly as a result of award variations granted in 1969-70 and the forecast increase in the strength of the Australian Regular Army. The estimated increase of $4,405,000 in expenditure on accommodation and technical facilities includes increases of $1,329,000 for repairs and maintenance of buildings, etc., $1,216,000 for increased provision of married quarters under the Commonwealth-State Housing Agreement, $1,102,000 for the acquisition of sites and facilities and $447,000 for increased expenditure on new works. These increases are largely offset by an estimated reduction of $12,125,000 in expenditure on arms, armament and equipment.
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#### Air
Estimated increases in expenditure include $8,171,000 in expenditure on equipment and stores, $5,806,000 on pay and salaries, $2,608,000 on accommodation and technical facilities and $2,814,000 on forces overseas. The forecast increase of $8,171,000 in expenditure on equipment and stores for the R.A.A.F. includes $6,616,000 for spares and support equipment for the 24 F4E Phantom aircraft being leased from the United States Government. Award increases and the forecast increases in the strengths of the Permanent Air Force and in civilian staff account for the estimated increases in expenditure on pay and salaries. The estimate of expenditure on accommodation and technical facilities includes a decrease of $1,173,000 for married quarters for the R.A.A.F., which is more than offset by increases of $2,721,000 for new works and $783,000 for repairs and maintenance. The estimate of $46,840,000 for expenditure on the purchase, manufacture and lease of aircraft includes provision for expenditure on new projects, including purchases of medium lift and utility helicopters and leasing of the 24 Phantom aircraft; but, because of a prospective decline in payments in 1970-71 for existing projects, particularly for Mirage and F111-C aircraft, a net decrease of $8,226,000 is estimated.
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#### Supply
It is estimated that there will be a net increase in expenditure of $8,406,000. Expenditure on salaries is estimated to increase by $3,851,000 of which $2,613,000 is for defence research and development establishments and $1,238,000 for the remainder of the Department. An increase of $2,305,000 has been made in the provision for maintenance of production capacity and additional working capital for Government factories. The main elements of this are an additional $2,262,000 for production development of a number of projects - notably Project 'N' which involves the development of two fixed-wing light aircraft prototypes and for which $2,300,000 is being provided in 1970-71- and an additional $417,000 for reserve capacity in the factories. Expenditure on accommodation and technical facilities is estimated to increase by $2,241,000 of which $1,649,000 is for new works.
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#### General Services
Interest on Defence loans raised in the United States of America to finance purchase of defence equip- ment is estimated to increase by $3,264,000. The estimated increase of $3,026,000 in the Government's contribution to the Defence Forces Retirement Benefits Fund reflects a general increase in payments of pensions, gratuities and other payments under the *Defence Forces Retirement Benefits Act* 1948-1970.
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#### Defence Expenditure Overseas
Defence expenditure overseas is estimated to be S233,000,000 in 1970-71 against actual expenditure of $234,000,000 in 1969-70.
During 1969-70 payments continued on current aircraft projects such as Tracker and Skyhawk for the R.A.N, and the FU1-C, Orion, Mirage and Macchi for the R.A.A.F., *on* other capital items including the Charles F. Adams class (DDG) destroyers and the Oberon class submarines, and on the maintenance of forces overseas. There was also a deposit of $1,313,000 on ten additional Skyhawk aircraft for the R.A.N. The foregoing figures do not include defence expenditure in Papua and New Guinea or defence aid for Malaysia and Singapore and South Vietnam.
Defence expenditure overseas includes the following payments for material and equipment financed under credit arrangements with the United States of America authorised by the *Loan (Defence) Acts* 1966, 1968 and 1970.
Repayments of principal under these loans amounted to $53,675,875 in 1969-70 and arc estimated to amount to $58,600,000 in 1970-71.
This item includes payments in the nature of financial assistance to or Ibr the States, except payments to the States for the maintenance of tuberculosis hospitals and payments under the *Stales Grants (Deserted Wives) Act* 1968, both of which are charged to the National Welfare Fund, contributions towards the cost of development of an integrated township at Exmouth, which are charged to Defence Services, and expenditure on Aboriginal Advancement, which is included under Item Number 10 - Other Expenditures. It also includes interest-free capital grants to be made to the States to finance part of their non-revenue producing works, advances to the States for housing under Housing Agreements and allocations to the States under the Loan Council borrowing programmes Tor State works. Further details of the various payments ure given in the White Paper 'Commonwealth Payments to or Ibr the Slates, 1970-71'.
In 1970-71 Commonwealth payments lo or for the States and Works and Housing programmes are estimated to total 82,708,109,000- an increase of 5291,494,000 or 12. 1 per cent.
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#### General Revenue Payments
General revenue payments are estimated to increase by a net $145,561,000 or 12.2 per cent. Financial assistance grants payable under the new arrangements decided at the conference with *the* Premiers in June 1970 are estimated to increase by 8179,781,000, including §10,000.000 transferred from Tasmania's special grant to the State's financial assistance grant. The new financial arrangements decided at the Premiers* Conference in June are described in detail in Chapter II of 'Commonwealth Payments to or for the States, 1970-71'. With the transfer of 810,000,000 to Tasmania's financial assistance grant, the special grant to Tasmania is estimated to be $8,220,000 less than in 1969-70. The estimates do not include any provision for tha payment of a special grant to South Australia, which has made application to the Grants Commission for such a payment. No provision has been made for payments of special revenue assistance in 1970-71 ; in 1969-70 special revenue assistance totalling 826,000,000 was provided, including an advance of $10,000,000 to Victoria, to help the States meet budgetary difficulties.
*Specific Purpose Payments of a Revenue Nature*
Specific purpose payments of a revenue nature are estimated to be $37,31 1,000 greater than in 1969-70. Payments to the States for education purposes are estimated to increase by $25,351,000, which includes an increase of $12,123,000 in payments to assist independent schools. Payments to assist the States meet debt charges are estimated to be $12,894,000 greater, the largest element being an amount of $11,504,000 granted to the States, under the new financial arrangements agreed with the Premiers in June, to meet debt charges on $200,000,000 of State debt.
*Specific Purpose Payments of a Capital Nature*
Specific purpose payments of a capital nature are estimated to increase by $43,623,000. This includes estimated increases of $25,000,000 in Commonwealth aid roads grants, $17,411,000 in payments to the States for education and $3,282,000 in payments for beef cattle roads. Payments to the States for the construction of self-contained dwelling units for certain single aged pensioners are expected to increase by $4,775,000. In addition, payments to the States for the development and control of water resources are estimated to increase by $4,715,000 including $1,663,000 for the Fairbairn Dam (Queensland), $1,250,000 for the Bundaberg Irrigation Works (Queensland), $1,015,000 for the King River Dam (Victoria), and $1,014,000 for water resources investigations/measurements. Grants for railway construction projects are estimated to be $9,604,000 less than in 1969-70 and assistance to Tasmania for a hydro-electric scheme $4,700,000 less.
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#### Works and Housing Programmes
At its meeting in June 1970, the Australian Loan Council approved a government borrowing programme for 1970-71 of which $823,000,000 was for the financing of State Works and Housing. This includes $200,000,000 allocated to the Commonwealth to finance interest-free capital grants to the States for works and $142,550,000 allocated to the Commonwealth to finance advances to the States under the Commonwealth - State Housing Agreements. The balance of $480,450,000 constitutes the borrowing programme of the State Governments for works purposes.
The Loan Council approved borrowing programmes of $399,600,000 for State semi-government and local authorities with programmes in excess of $300,000 in 1970-7], and $1,218,000 for Commonwealth authorities. The loan Council also decided that no overall limit should be placed on borrowings by authorities for which the State Governments approve individual programmes of not more than $300,000 , in 1970-71.
The National Welfare Fund Act requires that the payment from Consolidated Revenue to the National Welfare Fund each year be equal to the actual expenditure from the Fund in that year. In 1969-70 expenditure from the Fund was 31,341,799,000 and, after taking account of the costs of new health measures effective as from 1 July 1970 and the proposals announced in the Budget Speech, it is estimated to total 31,472,865,000 in 1970-71, an increase of $131,066,000.
Of this increase, the additional full-year cost in 1970-71 of measures introduced in the 1969-70 Budget, or during 1969-70, are estimated to account for 525,949,000. The cost of the health measures effective as from 1 July 1970 are estimated to account for 335,000,000. The measures announced in the 1970-71 Budget Speech are estimated to add 322,623,000 to expenditure in 1970-71 and S29,769,000 in a full year. Details of the estimated costs of the particular proposals are as follows: -
In 1970-71 there will be four twelve-weekly bank payments of child endowment compared with five in 1969-70. It is estimated that this will reduce expenditure in 1970-71 compared with 1969-70 by $24,420,000.
Existing and proposed rates of benefits are outlined in Statement No. 10.
Expenditure on Repatriation Services is estimated to increase by $16,790,000 in 1970-71 to $313,494,000. The additional full-year cost in 1970-71 of measures introduced in the 1969-70 Budget are estimated to account for $3,607,000 of this increase. The proposals announced in the Budget Speech are estimated to cost $6,116,000 in 1970-71 and $8,158,000 in a full year. Details of the estimated costs of the particular proposals are as follows:
Existing and proposed rates of benefits are outlined in Statement No. 10.
*/Merest* - *Commonwealth Inscribed Stock Act, etc.* The difference between the rates of interest at which the Commonwealth borrows in Australia and overseas, and the lower rates charged by the Commonwealth on advances to the States under the Commonwealth-State Housing Agreements, is the main factor accounting for the estimated increase of $2,084,000 in interest payments under the Commonwealth Inscribed Stock Act, etc., in 1970-71. Higher interest rates offered in Australia on new securities issued by the Commonwealth are also expected to contribute to the increase. There will be some offsetting savings resulting from the reduction of debt by the National Debt Sinking Fund and the Loan Consolidation and Investment Reserve.
*Sinking Fund.* Under the *National Debt Sinking Fund Act* 1966-1967, the Commonwealth makes a 4 per cent contribution towards the reduction of specified debt. In 1970-71, the contribution required from the Consolidated Revenue Fund is estimated to decrease by a net $5,150,000. The net debt, on which the 4 per cent contribution is calculated, declined by $167,180,000 in 1969-70 (including a net decline of $137,410,000 in Treasury Notes and $14,000,000 in Treasury Bills) resulting in an estimated decrease in the contribution from Consolidated Revenue Fund of $6,687,000. However, the interest income of the Sinking Fund - by which, under the Act, the payment from the Consolidated Revenue Fund is reduced - is estimated to be lower in 1970-71 and the estimated payment from Consolidated Revenue correspondingly greater.
The estimated increase in Departmental Running Expenses is made up as follows:
The estimated increase in expenditure in the Australian Capital Territory includes $2,297,000 for expenditure by the Department of the Interior and $1,667,000 for the Department of Education and Science. Of the latter increase, $926,000 is for payments to the New South Wales Department of Education for teachers at government schools in the Australian Capital Territory and $416,000 reflects the full-year cost of per capita grants for the operating expenses of independent schools and increased interest payments arising from the independent school construction programme.
The estimated increase of $6,242,000 in expenditure in the Northern Territory results from continuing rapid expansion of community and welfare services. Expenditure by the Department of the Interior is estimated to increase by $2,740,000 which includes increases of $1,112,000 for salaries and administrative expenses, $880,000 for aboriginal welfare activities and $511,000 for general services undertaken by the Northern Territory Administration. Expenditure on health services is estimated to increase by 51,306,000 and expenditure undertaken by the Department of Works is estimated to increase by $1,253,000.
The figures in this table summarise clearly identifiable items in the Budget which are in the nature of economic (i.e. non-military) aid to developing countries.
A number of Commonwealth Departments and instrumentalities operate in Papua and New Guinea and incur direct expenditures of an economic nature in the Territory which are also regarded as aid for purposes of international comparison. Such expenditures are included under other heads in the Budget. Details nf total expenditure on external aid, including estimates of expenditure on certain items noi included in the table above, are set out in Statement No. 8.
The figures in this table summarise bounties, subsidies and certain other Commonwealth payments to industry. Details of these, together with information on other Commonwealth expenditures made to assist industry and assistance to industry through the taxation system, are set out in Statement No. 9.
Other Expenditures comprise expenditures and estimated expenditures under annual and special appropriations from the Consolidated Revenue Fund and the Loan Fund, which are not included under other items. Total expenditure under this item is estimated to increase by $44,951,000. Larger variations are:
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#### Education and Science
*Australian National University.* The estimated increase of $4,286,000 in payments to the Australian National University in 1970-71 reflects the first full-year costs of the 1970-72 triennial programme and the recently approved academic salary increases.
*Commonwealth Scholarship Schemes.* The estimated increase of $5,225,000 includes $794,000 lor postgraduate awards, $3,480,000 for university scholarships and $772,000 for advanced educationscholarships. The increase in the cost of post-graduate awards reflects the decisions announced in the Budget Speech, in respect of the 1971 academic year, to increase the number of existing awards and to introduce a new category of ' course study * awards. Similarly, the estimated increase in expenditure on university scholarships comprehends the cost of increasing the number of open-entrance scholarships to be made available in 1971, as announced in the Budget Speech. Provision has also been made for scholarships to be awarded to students who enter teacher education courses at the Canberra College of Advanced Education in 1971.
*Commonwealth Scientific and Industrial Research Organisation.* Of a total estimated increase of $4, 140,000 in 1970-71 nearly $3,300,000 is the result of increases in salaries due to awards and determinations, and administrative expenses. An additional $800,000 is required for the expansion of existing research programmes and the commencement of new programmes.
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#### Health
Of the estimated increase of $1,030,000 in these expenditures, an amount of $500,000 has been provided for a new programme of drug education. A further $255,000 relates to the estimated additional cost of increased medical research salaries.
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#### Immigration
*Migrant Education.* Expenditure on migrant education services is estimated to increase by $2,667,000 following the Government's decision to expand migrant education programmes. The child migrant education programme accounts for $1,534,000 of the estimated increase and intensive English language courses for $738,000.
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#### National Development
*Australian Atomic Energy Commission.* The running expenses of the Australian Atomic Energy Commission are estimated to increase by a net $920,000 in 1970-71. An additional $724,000 is required for wages and salaries mainly to provide for the full-year effect of arbitration determinations made during 1969-70, while expenditure on special nuclear materials and contracts for outside engineering services are expected to increase by $431,000 and $287,000 respectively. It is estimated that expenditure on Rum Jungle will be $300,000 less and that the cessation of uranium deposit exploration work will involve a reduction of $360,000 in expenditure in 1970-71.
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#### Postmaster-General's
*Broadcasting and Television Services.* The estimated increase in expenditure of $4,914,000 includes $3,644,000 for increased running expenses of the Australian Broadcasting Commission and $1,121,000 for additional expenditure on technical services provided by the Postmaster-General's Department.
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#### Primary Industry
*Wool Promotion and Research.* Expenditure on general wool promotion and research is expected to increase by $10,122,000. In addition, the Commonwealth has agreed to support a research programme on pre-sale objective measurement of wool. The estimated cost in 1970-71 is $650,000.
*War Service Land Settlement.* Payments to the agent Stales under the *States Grants (War Service Land Settlement) Act* 1952-1953 for the acquisition and development of properties and for the provision of credit facilities to soldier settlers are financed from loan moneys and amounted to $3,386,000 in 1969-70. Of the estimated payment of $4,000,000 in 1970-71 approximately $3,360,000 will be in respect of the provision of credit facilities. The estimated increase of 1614,000 in these expenditures in 1970-71 arises mainly from a general increase in the number of advances to settlers in the agent States. The table which follows shows, on a State basis, estimated expenditure in 1970-71 and actual expenditure in 1968-69 and 1969-70.
Administrative expenses under this scheme, which are met from annual appropriations, are estimated to increase from $578,000 to $700,000 in 1970-71.
*Other.* It is estimated that expenditure on these items will increase by a net $439,000 in 1970-71. An initial provision of $500,000 has been made for Commonwealth payments, on a matching basis with industry, for fisheries research.
{:#subdebate-14-15}
#### Prime Minister's
*Aboriginal Advancement.* An amount of $7,160,000 was paid to the Aboriginal Advancement Trust Account in 1969-70, which, with the unexpended balance in the Trust Account, meant that $8,500,000 was available for expenditure on Aboriginal Advancement. Actual expenditure in 1969-70 totalled $7,572,000 of which grants to the States totalled $5,760,000. It is estimated that $10,400,000 will be paid to the Aboriginal Advancement Trust Account in 1970-71, so that, with the balance in the Fund at I July 1970, $11,300,000 will bc available for expenditure in 1970-71. An additional $1,240,000 is required for payment to the States, payments under the Study and Secondary Grants schemes are estimated to increase by $1,385,000 and an additional $524,000 is required for expenditure in the Northern Territory. Expenditure on other Aboriginal Advancement Programmes is estimated to increase by $379,000.
*Other.* Expenditure under this, heading is estimated to decrease by a net $1,131,000 in 1970-71. Expenditure associated with the Australian pavilion at the Universal and International Exhibition being held in Osaka is estimated to be $2,872,000 less than in 1969-70. Commonwealth expenditure on support for the arts is estimated to increase by $1,166,000 in 1970-71.
{:#subdebate-14-16}
#### Social Services
*Homes for Aged Persons.* Expenditure under the *Aged Persons Homes Act* 1954-1969 is estimated to increase by $1,300,000 in 1970-71, because of provisions made for a larger number of grants to eligible organisations.
*Other.* Expenditure under this heading is expected to increase by $1,507,000 in 1970-71. Grants to eligible organisations under the *Handicapped Children (Assistance) Act* 1970 will be payable for the first time in 1970-71 and are estimated to amount to $1,000,000. As announced in the Budget Speech, the *Sheltered Employment (Assistance) Aci* 1967 will be amended to provide further assistance for disabled persons at an. estimated cost of $400,000 in 1970-71 and $900,000 in a full year.
{:#subdebate-14-17}
#### Treasury
*Superannuation.* Growth in the number of pensioners under the *Superannuation Act* 1922-1968 together with rising entitlements to pension because of progressive salary increases is estimated to result in an increase of $3,942,000 in Government contributions to the Superannuation Fund. Payments in respect of pensions to former Post Office employees are estimated to increase by $1,646,000 and payments in respect of other pensioners by $2,296,000.
Comments are set out below on the main changes resulting in the estimated net increase of $77,673,000 in advances for capital purposes.
*Post Office,* lt is estimated that an additional $7,000,000 will be made available to the Post Office in 1970-71. This increase, together with funds available from internal sources, is required to finance an increased programme of capital expenditure particularly on additional telecommunications equipment to meet increased requirements for telephone services, trunk facilities and associated equipment.
*Australian National Airlines Commission and Qantas Airways Limited.* Advances to the Australian National Airlines Commission are estimated to increase by $10,490,000 and those to Qantas Airways Limited by $41,202,000. These increases are mainly for expenditure in 1970-71 on aircraft under current airline re-equipment programmes. The Australian National Airlines Commission takes delivery of one Boeing 727 and three DC9 aircraft in 1970-71 and it is expected that Qantas will make payments on four Boeing 747 aircraft for delivery in 1971-72.
*Australian Coastal Shipping Commission.* In 1969-70 $14,000,000 was provided to assist the Commission finance the purchase and construction of ships and terminal development works. The $2,000,000 being advanced in 1970-71 is for further expenditure on these projects.
*Snowy Mountains Hydro-electric Authority.* The estimated decrease of $4,407,000 in expenditure in 1970-71 results from a slowing down in the authority's construction activities as the scheme nears its completion.
*Snowy Mountains Engineering Corporation.* An initial provision of 2800,000 has been made for working capital for this new corporation.
*Australian Atomic Energy Commission - Repayable Advance.* The estimated Increase of 81,666,000 relates to administrative expenditure and expenditure on site preparation for the Jervis Bay Nuclear Power Station. No provision has been made for expenditure under major construction contracts; tenders are currently being evaluated and it is expected that a contract will be let later in the year.
*Australian Industry Development Corporation.* An amount of 825,000,000 has been included for the initial capital subscription to this Corporation.
*War Service Homes.* In the light of the demand for advances, the provision for War Service Homes has been increased by $5,000,000.
*Australian Capital Territory and Northern Territory Housing Advances.* The estimated increase of $1,778,000 allows for an expected increase in the number of applications for housing loans in the Australian Capital Territory and Northern Territory.
In 1970-71, expenditure on other capital works and services is estimated to total $247,294,000, an increase of $54,124,000. The main factors giving rise to this estimated increase are:
{:#subdebate-14-18}
#### Attorney-General's
The estimated increase of $1,094,000 is mainly for preliminary work on the Commonwealth-State Law Courts in Sydney, towards which the Commonwealth will contribute 49 per cent of the cost.
{:#subdebate-14-19}
#### Civil Aviation
The expansion of airport facilities, including navigational aids, air traffic control facilities, and communications equipment accounts for most of the estimated increase of $4,135,000 in expenditure in 1970-71,
{:#subdebate-14-20}
#### Education and Science
*Canberra College qf Advanced Education.* The increase of $2,100,000 arises from the fact that 1970-71 will be the first full year in which expenditure will be incurred under the approved programme of capital works and equipment purchases for the 1970-72 triennium.
*Other.* Included in the estimated increase of $1,577,000 are increases of $804,000 for Burgmann College, an affiliated college at the Australian National University, and $774,000 for the Anglo-Australian Telescope project.
{:#subdebate-14-21}
#### Health
The increase of $4,801,000 in estimated expenditure is due mainly to provision for the purchase of computer equipment estimated to cost $4,773,000.
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#### Postmaster-General's
*Broadcasting -and Television Services.* The increase of $1,771,000 in estimated expenditure is mainly attributable to an increase of $941,000 for the installation of transmission equipment for new national broadcasting and television stations, an increase of $500,000 in the Australian Broadcasting Commission's requirements for technical equipment and the inclusion under this heading for the first time of funds totalling $320,000 to provide technical equipment for the Australian Broadcasting Control Board.
{:#subdebate-14-23}
#### Repatriation
The provision of $2,083,000 for the purchase and installation of computer equipment accounts for most of the estimated increase of $2,142,000 in expenditure on this item.
{:#subdebate-14-24}
#### Shipping and Transport
*Railways.* An amount of $3,000,000 is expected to be spent in 1970-71 on the construction of the new railway between Port Augusta and Whyalla. The balance of the estimated increase of $5,299,000 in capital expenditure by the Commonwealth Railways relates to the continuing programme of upgrading existing lines and associated facilities, and the provision of additional rolling stock to cater for increasing traffic.
{:#subdebate-14-25}
#### Social Services
Expenditure in 1970-71 is expected to increase by $2,427,000 due mainly to the provision of $2,402,000 for the purchase and installation of computing equipment.
{:#subdebate-14-26}
#### Works
*Plant and Equipment, etc.* Expenditure under this heading is estimated to increase by $470,000 mainly because of the need to purchase a special concreting plant for use in extending the runway at Tullamarine Airport.
*Civil Works Programme.* Expenditure under the civil works programme (excluding the Australian Capital Territory and the Northern Territory) is estimated to increase by a net $435,000. The largest increase is $3,884,000 for Broadcasting and Television Services, mainly for expenditure on radio studio buildings at Collinswood (South Australia) and in Sydney and on television transmitter facilities at Cairns (Queensland). Expenditure on laboratory projects for the Commonwealth Scientific and Industrial Research Organisation at North Ryde (N.S.W.) and other locations is estimated to increase by $1,830,000. Other increases are $604,000 for the Department of Labour and National. Service, mainly for expenditure on hostel accommodation, $537,000 for archival facilities for the Prime Minister's Department, and $325,000 for Repatriation General Hospitals. The main reductions in estimated expenditure are $3,141,000 in expenditure for the Department of Immigration on migrant hostels in New South Wales and Victoria, $1,980,000 for Civil Aviation works, and $1,272,000 in Commonwealth office construction for the Department of the Interior outside the Australian Capital Territory and the Northern Territory.
{:#subdebate-14-27}
#### Territories
*Australian Capital Territory.* Of the estimated increase of $11,578,000 in expenditure on capital works and services in the Australian Capital Territory $6,572,000 relates to increased expenditure by the National Capital Development Commission principally for the construction of Commonwealth offices and for basic works such as land development, housing and roads. Expenditure on buildings and works in the A.C.T. for the Department of Health is estimated to increase by $3,915,000 mainly on account of the construction of the new Woden Valley Hospital.
*Northern Territory.* Of the estimated increase of $19,163,000 in expenditure on capital works and services in the Northern Territory, $1 6,146,000 is for increased expenditure under the civil works programme for the three major Northern Territory sponsoring departments - Interior, Health and Education and Science - mainly relating to large urban development projects in Darwin and infrastructure works at Nhulunbuy (Gove).
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page 42
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### STATEMENT No. 3- ESTIMATES OF RECEIPTS, 1970-71
In the absence of any changes in existing taxes and other charges, it is estimated that total receipts in 1970-71 would amount to $7,921,588,000, which would be $840,478,000 or 11.9 per cent more than total receipts in 1969-70.
Details of the estimated effects in 1970-71 and in a full year of the revenue proposals announced in the Budget Speech are shown in the following table.
After taking the effects of these revenue proposals into account, total receipts in 1970-71 are estimated at $7,887,148,000, an increase of $806,038,000, or 11 .4 per cent. In 1969-70 total receipts increased by $897,388,000, or 14.5 per cent, including the effects of revenue measures announced in the 1969-70 Budget Speech which were estimated to reduce receipts by a net $13,900,000 in 1969-70.
The following table compares estimated receipts in 1970-7] with actual receipts in the two preceding financial years.
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#### Taxation Revenue
In 1970-71 total taxation revenue is estimated to be $7,000,800,000, an increase of $713,364,000 or 11.3 per cent over 1969-70. The main changes in estimated taxation collections are discussed in the following notes.
*Customs Duty.* On the basis of existing legislation, collections of customs duty are estimated to increase by $45,513,000 in 1970-71 to $460,000,000. This estimate allows for a further increase in recorded imports in 1970-71, though less rapid than that which occurred in 1969-70, and for some increase in the proportion of imports dutiable at higher rates. After allowing for the effects of the measures announced in the Budget Speech, it is estimated that collections will increase by $48,313,000 to $462,800,000 in 1970-71.
*Excise Duty.* The estimate of excise duty collections is based on the assumption that consumer spending will continue to increase strongly in 1970-71. On the basis of existing legislation, excise collections are estimated to increase by $48,288,000 or 5.1 percent, following an increase of $38,698,000 or 4.3 per cent in 1969-70. After allowing for the effects of the measures announced in the Budget Speech, it is estimated that collections will increase by $140,288,000 to $1,080,000,000 io 1970-71. The main components of the estimate for 1970-71 are as follows:
*Sales Tax.* The estimate of sales tax collections in 1970-71 assumes that the value of sales of goods subject to sales tax will increase at a slightly slower rate in 1970-71 than in 1969-70. On the basis of existing legislation, sales tax collections are estimated to increase by $54,641,000, or about 9.6 per cent, to $622,000,000. After allowing for the effects of measures announced in the Budget Speech, it is estimated that sales tax collections will increase by $77,641,000 to $645,000,000 in 1970-71.
*Income Tax - Individuals,* lt is estimated that, on the basis of existing legislation, collections of income tax from individuals in 1970-71 would total $3,266,000,000. an increase of $407,864,000, or 14.3 per cent, on collections in 1969-70.
{: type="a" start="a"}
0.
*Pay-as-you-earn Instalment Deductions* - On the basis of existing legislation, gross pay-as-you-earn instalment deductions in 1970-71 are estimated at $2,966,000,000, or $441,327,000 more than in 1969-70. In 1969-70 average weekly earnings increased by about 8 per cent and the average number of employees in terms of 'male units' by slightly more than 3.5 per cent. For the purpose of setting down a figure for payasyouearn collections, an increase of 7 per cent in average earnings has been assumed for 1970-71. This assumption, which takes account of the rise in average weekly earnings which has already occurred, does not imply that the trend in earnings from this point of time can be forecast with any reliability. Nor does its use imply that it is a Budget objective. The increase in the average number of employees assumed for 1970-71, 3.5 per cent, is about the same as occurred in 1969-70. Refunds of tax instalment deductions are estimated to increase by $69,546,000. so that at existing rates of taxation, net pay-as-you-earn collections are estimated to increase by $371,781,000 to $2,456,000,000.
1.
*Other.* On the basis of existing legislation, collections on assessments of individuals are estimated to increase by $36,083,000 in 1970-71. compared with an increase of $121,741,000 in 1969-70. Income, other than wages and salaries, in 1969-70, which is subject to tax in 1970-71, is estimated to have been only slightly greater than in 1968-69 largely because of an estimated decline of about 22 per cent in the incomes of primary producers in 1969-70. The incomes of other individuals subject to provisional tax are estimated to have increased by 9.3 per cent in 1969-70.
The measures announced in the Budget Speech are estimated to reduce income tax collections from individuals by $230,000,000 in 1970-71 and $292,000,000 in a full year. After allowing for these changes, it is estimated that income tax collections from individuals will increase by $177,864,000 to $3,036,000,000 in 1970-71.
*Income Tax - Companies.* Incomes of companies in 1969-70 which are subject to tax in 1970-71 are estimated to have increased by over 14 per cent following an increase of about 13.6 per cent in 1968-69. At existing rates of tax, collections of income tax from companies in 1970-71 are estimated at $1,325,000,000, an increase of $173,636,000, or 15.1 per cent. After allowing for the effects of measures announced in the Budget Speech, collections of income tax from companies are estimated to increase by $249,636,000 to $1,401,000,000 in 1970-71.
*Pay-roll Tax.* On the basis of the assumed increases in employment and average weekly earnings adopted for the estimate of gross pay-as-you-earn collections, it is estimated that gross pay-roll tax collections will total $294,000,000 in 1970-71, an increase of $29,950,000. After allowing for pay-roll tax rebates under the export incentive scheme, which are estimated to increase by $8,418,000 to $42,000,000, net pay-roll tax collections are estimated to increase by $21,531,000 to $252,000,000 in 1970-71.
*Estate Duty.* Following an abnormally large increase of $10,606,000 in 1969-70, it is estimated that collections of estate duty will decline by $6,332,000 in 1970-71 to $65,000,000. It is expected that collections in 1970-71 will be affected by the first full year of operation of the concessions introduced in the 1969-70 Budget in respect of estates of primary producers.
{:#subdebate-15-1}
#### Civil Aviation
*Air Navigation Charges.* Collections are estimated to increase by $3,684,000 in 1970-71 as a result of growth in air traffic, the full-year effects of increased rates applicable from 1 January 1970 and the increase in charges announced in the Budget Speech. The increase in charges is to apply from I January 1971 and is estimated to yield $1,800,000 in a full year.
*Other.* The estimated increase of $1,736,000 relates mainly to an expected increase in receipts from site and building rentals and the operation of business concessions following the opening of the new international passenger terminals at Sydney and Melbourne airports.
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#### Housing
*War Service Homes - Repayments of Interest and Principal.* The estimated increase of $4,568,000 results from an increase in the amount of outstanding advances and an allowance for an expected rise in the rate of discharge of outstanding advances.
{:#subdebate-15-3}
#### National Development
*Snowy Mountains Hydro-electric Authority - Interest.* Receipts from interest from the Snowy Mountains Hydro-electric Authority are estimated to increase by $9,270,000 in 1970-71, mainly as a result of bringing to account capital expenditure on the Murray Power Stations.
*Snowy Mountains Hydro-electric Authority - Principal.* Repayments of principal by the Authority are estimated to increase by $949,000 mainly as a result of the commencement of repayments in respect of Murray Power Stations.
{:#subdebate-15-4}
#### Postmaster-General's
*Broadcasting and Television Licence Fees and Charges.* The estimated increase of $1 ,837,000 in 1970-71 is largely due to an increase of $1,311,000 in viewers' and listeners' licence fees as a result of the growth in the number of licences and an increase of $470,000 in revenue from wireless telegraphy licences, most of which is due to the proposed increase in the licence fee.
{:#subdebate-15-5}
#### Primary Industry
*War Service Land Settlement.* The estimated reduction of $3,329,000 in revenue from war service land settlement is mainly a result of the termination of an agreement with the Commonwealth whereby the States of Tasmania and Western Australia undertook to repay over a five-year period, commencing 30 June 1965, the States' contributions towards excess costs of acquisition and development of war service land settlement farms.
*Wool Tax.* Receipts from the wool tax are expected to decline by $6,028,000 in 1970-71 following the reduction .in the rate of tax from 2 per cent to 1 per cent of the value of woo! sold.
{:#subdebate-15-6}
#### Shipping and Transport
*Commonwealth Railways- Net Receipts.* Net receipts of the Commonwealth Railways are estimated to increase by $1,625,000. Mainly because of an expected increase in traffic on the Trans-Australian Railway and the North Australia Railway, gross receipts are estimated to increase by $2,161,000 and working expenses, which are offset against gross receipts, are expected to increase by $535,000.
*Other.* The estimated increase of $3,913,000 reflects an increase of $3,000,000 in repayments of loans made to the Australian Coastal Shipping Commission and an increase of $890,000 in interest on loans made to the Commission. Repayments of principal and interest in connection with a number of State railway projects are estimated to increase by $628,000 while receipts from light dues are expected to increase by $505,000, partly as a result of the increased dues announced in the Budget Speech. The payment in the nature of a dividend by the Australian Coastal Shipping Commission is estimated to be $1,075,500, less than in 1969-70.
{:#subdebate-15-7}
#### Treasury
*Reserve Bank.* Payments to Consolidated Revenue of Reserve Bank profits are estimated to increase by $14,445,000 in 1970-71.
*International Monetary Fund.* In 1969-70 Australia received $1,798,000 as its share of the net income of the International Monetary Fund for the year ended 30 April 1969 and $1,279,000 in remuneration as a 'net creditor' for the nine months ended 30 April 1970. Remuneration is expected to amount to $1,600,000 in 1970-71 but no receipt is expected from the net income of the Fund.
*Post Office - Interest on Capital.* It is estimated that, as a result of higher interest rates and the growth in the amount of capital provided to the Post Office, interest received from the Post Office will increase by $16,149,000 in 1970-71.
*Off-shore Petroleum Royalties.* It is estimated that the Commonwealth's share of royalties on production in Bass Strait will increase by $4,625,000 in 1970-71 as production from the Bass Strait fields increases.
*Wheat Board Advances.* Interest on the advance of $250,230,000 to the Wheat Board, to enable the Board to repay a loan to the Reserve Bank, is estimated to amount to $6,500,000 in 1970-71. There was no such interest payment in 1969-70.
*Other.* The main factors affecting other revenue are the initial repayment of $3,021,000 by Queensland of loans made under the *Sugar Marketing Assistance Agreement Act* 1967 and the *Sugar Industry Assistance Act* 1967, and an estimated increase of $1,229,000 in repayments by the States of Commonwealth advances to alleviate the effects of natural disasters.
{:#subdebate-15-8}
#### Supply
*Repayments from the United Kingdom - Weapons Research Establishment.* The British contribution to the cost of the Weapons Research Establishment is estimated to decline by $1,318,000 in 1970-71 due to reduced activity on the Woomera Range.
{:#subdebate-15-9}
#### Territories
*Australian Capital Territory.* Of the estimated increase in revenue of $4,364,000 from the Australian Capital Territory, the principal increases are $2,162,000 from increased proceeds from sales ot government houses and $1,495,000 from interest and capital repayments on advances to the Australian Capital Territory Housing Commissioner and local building societies. The Government's new land tenure arrangements and the greater number of ratepayers for the Australian Capital Territory are expected to provide an increase in general rates of $1,695,000, which will be partially offset by an estimated decrease in revenue from land rents of $1,234,000.
*Northern Territory.* The estimated increase of $4,583,000 includes increases of $1,872,000 for interest and principal repayments on advances for housing, $1,213,000 for land rents and rents paid by tenants of Administration-owned dwellings, $880,000 for electricity revenue and $636,000 for interest and principal repayments on advances to the Northern Territory Port Authority.
{:#subdebate-15-10}
#### Receipts of National Debt Sinking Fund
Details of the estimated receipts of the National Debt Sinking Fund are shown in the following table._
{:#subdebate-15-11}
#### Commonwealth
*Contributions from the Consolidated Revenue Fund and Interest on Investments.* The percentage contributions from the Consolidated Revenue Fund to the National Debt Sinking Fund and the interest income of the Sinking Fund are estimated to total $23,501,000 in 1970-71, $7,063,000 less than in 1969-70. The estimated decrease of $7,063,000 is mainly the result of a decline of $167,180,000 in 1969-70 in net debt subject to 4 per cent contribution under the *National Debt Sinking Fund Act* 1966-1967, including a net decline of $137,410,000 in Treasury Notes and $14,000,000 in Treasury Bills. The *National Debt Sinking Fund Act* 1966-1967 provides for the contribution from the Consolidated Revenue Fund to be reduced by an amount equal to income from investments of Commonwealth balances in the Fund. This income is estimated to be $1,913,000 less than in 1969-70 and the contribution from the Consolidated Revenue Fund to be. correspondingly greater.
*Repayments of Loan Fund Advances for Housing.* Repayments to the Sinking Fund of advances to the States under the various Housing Agreement Acts are estimated to be $1,149,000 greater in 1970-71 because of the increase in these advances.
*Other Repayments.* Other repayments to the Sinking Fund include repayments made under the *Railway Agreement (Queensland) Acts* 1961 and 1968, the *Loan (Emergency Wheat Storage) Act* 1955, the *War Service Land Settlement Agreements Act* 1945 and the *Nauru Island Agreement Act* 1919-1932. These repayments are estimated to decrease by $1,685,000 in 1970-71. In 1969-70 the British Phosphate Commissioners repaid in full an amount of $1,780,000 due to the Australian Government, representing the Nauru proportion of Partner Government capital.
*Receipts in Respect of State Debt*
*Contributions by Commonwealth and States.* Because of the growth of State debt, contributions by the Commonwealth and the States in respect of State debt are estimated to be $9,-158,000 greater in 1970-71.
Net Increase in Other Balances of the CommonwealLTH in the Trust Fund
The estimated increase in 1970-71 of $20,420,000 is attributable mainly to an expected increase in the interest on investments held by the Loan Consolidation and Investment Reserve.
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page 50
{:#debate-16}
### STATEMENT No. 4- FINANCING TRANSACTIONS AND LIQUIDITY THE FINANCIAL YEAR 1969-70
{:#subdebate-16-0}
#### Financing Transactions
The following table summarises the financing transactions for the financial years 1968-69 and 1969-70.
In 1969-70 redemptions and other expenditure on the reduction of overseas debt exceeded overseas loan raisings and drawings on defence credits by $131 million.
Repayments of previous drawings under credit arrangements for defence purchases in the United States of America amounted to $54 million, $3 million more than drawings which totalled $51 million in 1969-70.
Drawings on loans arranged overseas for Qantas Airways Limited and the Australian National Airlines Commission to finance the purchase of aircraft amounted to $1 1 million but repayments of borrowings of this type amounted to $27 million, so that there were net repayments of $16 million.
The proceeds of other loans raised overseas, in Germany and Switzerland, amounted to $48 million, which was $112 million less than redemptions and other expenditure on the reduction of debt overseas.
An amount of $138 million was, therefore, required from financing transactions in Australia to cover net overseas redemptions of $131 million and the deficit of $7 million.
The net amount produced by loan raising operations in Australia in 1969-70 was $126 million. Gross proceeds from loans raised in Australia (including $16 million from State domestic loan raisings) amounted to $678 million and redemptions and other expenditure on the reduction of debt amounted to $414 million. There was a net decline of $137 million in Treasury Notes on issue during 1969-70, excluding a net amount of $184 million issued to the Reserve Bank to finance an advance to the Australian Wheat Board.
As $45 million was available from other financing transactions, including drawings on balances available to the Commonwealth and amounts available in respect of coinage transactions, an amount of $33 million remained after completing the financing of the deficit and meeting net redemptions overseas. Of this residual, $14 million was applied to redeem the Treasury Bills which remained on issue to the Reserve Bank at 30 June 1969 and $19 million was added to Commonwealth cash balances.
*Holdings of Commonwealth Securities.* There was an increase of about $90 million in the non-bank public's holdings of Commonwealth securities in 1969-70 - well below the increase of $166 million in the preceding year when liquidity grew at a much stronger rate.
Although Treasury Bills on issue to the Reserve Bank were reduced by $14 million, the Reserve Bank was a significant net purchaser of Commonwealth securities in 1969-70. The increase of $357 million in Reserve Bank holdings of other Commonwealth securities included $184 million of Treasury Notes issued to finance the advance to the Australian Wheat Board. In contrast with 1968-69, both the trading banks and the savings banks reduced their holdings of Commonwealth securities during 1969-70.
The following table shows changes in holdings of Commonwealth securities redeemable in Australia in 1968-69 and in 1969-70.
{:#subdebate-16-1}
#### The Budget and Liquidity
For the financial year 1969-70 as a whole, the Commonwealth's domestic transactions appear to have subtracted about $500 million from liquidity. There was also a comparatively modest increase in Rural Credits advances (before allowing for the Commonwealth's funding of an .advance to the Wheat Board) and a substantial private sector balance of payments surplus, both of which added to liquidity. These factors, together with some other minor elements, produced a much smaller than usual increase in 'primary liquidity'(a). The effects on the money supply were offset in part by a relatively strong increase in bank advances and a lower than usual level of net purchases of Commonwealth securities by the non-bank public. The net result was that the money supply increased at the comparatively slow rate of about 6.2 per cent. Percentage increases in the money supply over the last five years have been as follows:
Although the moderate rate of increase in the money supply in 1969-70 was partly attributable to the Commonwealth's domestic surplus, other policy measures reinforced the effects of that surplus. There was a two-stage Statutory Reserve Deposit call-up early in the year and during the period of seasonal tightness later in the year the higher Statutory Reserve Deposit ratio was maintained. The resultant pressures on bank liquidity, supplemented by higher interest rates on bank advances, influenced the rate of increase in bank advances. The increase in interest rates on Commonwealth securities had the effect of discouraging holders from selling their securities directly or indirectly to the Reserve Bank during the seasonal downswing in liquidity. But for these factors, there would have been a considerably larger increase in the money supply.
In 1 969-70 there was an accentuated seasonal swing in the Commonwealth's domestic financial transactions. In the first half of the year, there was a domestic deficit of over $700 million which *added* to liquidity. However, because of a net deficit in the private sector balance of payments and net repayments of Rural Credits advances for the period, there was a comparatively small build-up in liquidity for the economy as a whole. Partly as a result of the high level of their advances and of the Statutory Reserve Deposit call-up in the first half of 1969-70, the L.G.S. ratios of the trading banks at the end of this phase were low by comparison with previous years, and this limited the extent to which they were able to meet the increased demands for advances in the latter months of the year.
In the latter half of the year, mainly in the June- quarter, there was a Commonwealth domestic surplus sufficient to offset the domestic deficit of the first half of the year and to produce an overall domestic surplus of about $500 million for the year as a whole. Although there was a marked improvement in the private sector balance of payments position, the money supply declined by about $270 million in the June quarter. Increases in interest rates on Commonwealth securities and the increases in bank interest rates associated with high demand for money complemented the seasonal swing in Commonwealth domestic transactions and produced some monetary restraint on the economy.
{:#subdebate-16-2}
#### Prospects for 1970-71
*Financing Transactions* lt is estimated that Commonwealth receipts will slightly exceed Commonwealth expenditures in 1970-71.
Drawings under the credit arrangements for the purchase of defence equipment in the United States of America are estimated to be $78 million while repayments are estimated to be $59 million. Drawings on overseas loans to finance advances to Qantas Airways Limited and the Australian National Airlines Commission are estimated at $63 million, while repayments of previous loans for the airlines will be approximately $28 million.
In the present state of international capital markets, it is not possible to make a reliable estimate of new borrowings overseas for purposes other than defence and aircraft. Maturities falling due and other payments to reduce indebtedness overseas are likely to amount to about $93 million in 1970-71 compared with $160 million in 1969-70. Despite this reduction in commitments, it seems likely that there will again be net repayments overseas, although they will be less than in 1969-70.
Under the *International Monetary Agreements Act 1970,* Australia will subscribe about $147 million to the International Monetary Fund in 1970-71 to meet an equivalent increase in its quota at the Fund. Finance will have to be provided for one-quarter of this subscription, about $38 million, which will be payable in gold, while the remainder is payable in non-negotiable, non-interest bearing notes.
Net loan proceeds and the change in the Treasury Note issue in Australia cannot be estimated in advance with any degree of assurance. The value of securities due to mature during 1970-71 held in non-official hands is estimated at $774 million, compared with $486 million of securities in non-official hands which matured in 1969-70, but it is difficult to estimate the extent to which these securities will be redeemed rather than converted. It is also not possible accurately to predict what changes will occur in holdings of Commonwealth securities by the public, on the one hand, and by the banking system, on the other. These will reflect monetary and other developments during the course of the year. However, on the basis of the interest rates currently being offered on Commonwealth securities and with the prospect of a build-up in liquidity in the first half of the year, a significant increase in sales of securities can be expected.
*Loan Bill.* Because of the difficulty of estimating the net amounts available from loanraising operations in Australia and overseas there remains, in each year, the possibility that some borrowing from the Reserve Bank may be necessary to complete the Commonwealth's financing transactions. Accordingly, authority will be sought in a Loan Bill to borrow for defence purposes such amounts as are necessary to complete the Commonwealth's financing transactions. The Loan Bill will also seek authority to expend the proceeds on any borrowings made under it on Defence Services. The effect of charging expenditure on Defence Services to Loan Fund is to increase the amount paid from the Consolidated Revenue Fund to the Loan Consolidation and Investment Reserve.
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#### The Budget and Liquidity
It appears that the Commonwealth's domestic surplus for 1970-71 as a whole will be about $50 million greater than in 1969-70.
By contrast with the first half of 1969-70, the indications are that there will be a private sector balance of payments surplus in the first half of 1970-71 and a moderate increase in Rural Credits advances - each of these elements showed a small decline in the first half of 1969-70. There will also be a large Commonwealth domestic deficit in this period. As a result, there will almost certainly have been a relatively large build-up in liquidity by the end of the first half of 1970-71. Against this, a substantial increase in holdings of securities by the non-bank public is likely to occur in this period.
The Commonwealth's domestic financial transactions will again draw in funds in the latter half of the year, but, at this stage, there are too many uncertainties to attempt to forecast what the monetary situation will be then. Given, however, the prospective large build-up in liquidity in the first half of the year, the possibility of acute monetary stringency would seem to be less than in 1969-70.
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page 54
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### STATEMENT No. 5- BUDGET RESULT, 1969-70
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page 54
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### SUMMARY
The Commonwealth Budget deficit in 1969-70 was $7 million, which compares with the deficit of $30 million estimated in the Budget.
The Budget estimates and outcome for 1969-70 are summarised in the following table.
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page 54
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### EXPENDITURES
Actual expenditures in 1969-70 and the Budget estimates for that year are set out in the following table.
The main variations from the Budget estimates were as follows:
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#### Defence Services
In total, expenditure on Defence Services fell short of the Budget estimate by a net $1 million. There were, however, variations in a number of items. Expenditure on pay and allowances of members of the Defence Forces was$15 million greater than had been estimated and other salaries and administrative expenses were $5 million greater, mainly as a result of arbitration and other wage and salary determinations made after the Budget was presented. Expenditure on stores for the R.A.N, was $3 million greater than had been estimated in the Budget and contributions to the Defence Forces Retirement Benefits Fund were $2 million greater. There were shortfalls in expenditure on a number of equipment hems. Expenditure on the purchase and manufacture of aircraft for the R.A.A.F. was $8 million less than had been estimated as a result of the re-scheduling of payments for the FI 1 1-C aircraft. Payments for arms, armament and equipment for the Army and equipment and stores for the R.A.A.F. were each $5 million less than had been estimated. Expenditure on accommodation and technical facilities was 85 million less and on Naval construction $4 million less than the Budget estimate
*Payments to or for the States and Works and Housing Programmes*
Payments to or for the States and Works and Housing Programmes were a net $15 million greater than the Budget estimate. General revenue assistance exceeded the Budget estimate by $44 million. Mainly because the increase in average wages for the year ended March 1970 was greater than that assumed in the Budget, financial assistance grants paid to the States were $18 million greater. No provisions were made in the Budget for special revenue assistance to the States which amounted to $16 million, or for an advance of $10 million made to Victoria.
Specific purpose payments of a revenue nature were a net $3 million greater than had been estimated. Payments for drought relief were $5 million greater and payments for universities were $3 million greater, There were shortfalls of $4 million and $1 million, respectively, in payments for independent schools and for colleges of advanced education.
Specific prpose payments of a capital nature were $32 million less than the Budget estimate. Capital payments to the States for education purposes were $15 million less than had been estimated and included shortfalls of $6 million in payments for colleges of advanced education and $4 million in payments for universities. In addition, there were shortfalls of $5 million in payments to Tasmania for a hydro-electric scheme, $4 million in payments for dwellings for aged pensioners and $3 million in payments for beef cattle roads.
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#### National Welfare Fund
The payment to the National Welfare Fund was $4 million greater than the Budget estimate. Expenditures on medical benefits were $4 million greater and payments of hospital benefits, pharmaceutical benefits and nursing homes benefits each exceeded the Budget estimate by $3 million. Expenditure on widows' pensions fell short of the Budget estimate by $4 million, .
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#### Repatriation Services
Expenditure on repatriation services exceeded the. Budget estimate by $4 million, of which $2 million related to the running expenses of repatriation hospitals and other institutions. '
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#### Departmental' Running Expenses
Departmental running expenses were $25 million greater than the Budget estimate. Expenditure on, wages and salaries was $18 million greater, mainly because of increases in wage and salary rates arising from the National Wage Case and other arbitration determinations made after the Budget was presented.
*External Economic Aid (including Papua and New Guinea)*
External economic aid payments exceeded the Budget estimate by $3 million. A payment of $3 million to the Papua and. New Guinea Trust Account to provide temporary finance to cover a deficit in the Territory Budget and a repayable advance of $2 million to the Administration of Papua and New Guinea towards the construction of a township at Arawa and the other capital costs associated with the Bougainville copper project were made during 1969-70; no provision for these payments was included in the Budget. Calls made by the International' Development Association on Australia's contribution were $3 million less than had been estimated in the Budget:
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#### Commonwealth Payments to Industry
Commonwealth payments to industry fell short of the Budget estimate by $1 1 million. Phosphate fertilizer bounty and nitrogenous fertilizer subsidy payments each fell short of the estimate by 85 million. Industrial research and development grants were $2 million less. Net shipbuilding subsidy payments exceeded the Budget estimate by $2 million.
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#### Other Expenditures
Expenditures in this category were a net $9 million greater than the Budget estimate. Expenditures on assisted passage immigration schemes were $2 million greater because "of a larger than assumed intake of assisted migrants in 1969-70. Payments to the C.S.I.R.O. and expenditure on homes for aged persons each exceeded the Budget estimate by $2 million. The operating expenses of the broadcasting and television services were also $2 million greater. Expenditure on wool promotion and research was, however, $2 million less than had been estimated.
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#### Advances for Capital Purposes
Advances for capital purposes were 811 million less than had been estimated in the Budget. There was a shortfall of (19 million in advances to Qantas Airways Limited due to a re-scheduling of payments under the current aircraft re-equipment programme. There were increases in some other advances, the largest being 84 million in the advance to the Post Office.
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page 56
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### RECEIPTS
Actual receipts in 1969-70 and the Budget estimates for that year are set out in the following table.
The main variations from the Budget estimates were:
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#### Customs Duty
Imports of goods subject to duty increased more than had been assumed at the time of the Budget with the result that collections of customs duty during the year were $19 million greater than had been estimated.
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#### Excise Duty
Collections of excise duty were $20 million less than the Budget estimate because clearances of beer, tobacco and motor spirit increased less than had been expected.
*Income Tax - Individuals - Pay-as-you-earn*
Gross collections of P.A.Y.E. instalment deductions exceeded the Budget estimate by $60 million mainly because average earnings increased by more than was assumed for the purposes of "the Budget estimate. As refunds of P.A.Y.E. collections were very close to the estimate, net P.A.Y.E. collections exceeded the Budget estimate by $59 million.
*Income Tax - Individuals - Collections on Assessments*
Collections on assessment of income tax on individuals were $43 million less than had been estimated, largely because business incomes in 1968-69, particularly those of primary producers, rose less than had been estimated at the time of the Budget. These 1968-69 incomes were assessed to tax in 1969-70.
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#### Income Tax - Companies
Company incomes in 1968-69 - which were taxable in 1969-70 - increased more than was estimated at the time of the Budget, with the result that collections of income tax from companies exceeded the Budget estimate by $1 1 million.
*Pay-roll Tax*
Gross pay-roll tax collections were $4 million more than the Budget estimate mainly because average earnings increased more rapidly than had been assumed. Rebates of pay-roll tax under the export incentive scheme were $3 million less, so that net pay-roll tax collections exceeded the Budget estimate by $7 million.
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#### Estate Duty
Estate duty collections were $9 million more than had been estimated mainly because of a greater than expected increase in the number of assessments issued during 1969-70.
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#### Other Revenue
Other revenue exceeded the Budget estimate by $16 million. Repayments of interest and principal on War Service Homes advances, revenue from the Department of the Interior and revenue from the Defence Departments each exceeded the estimate by $3 million and revenue from the Department of Works exceeded the estimate by $2 million. An amount of $3 million, for which no provision was made in the Budget, was received from the International Monetary Fund as Australia's share of the net income of the Fund and its remuneration as a " net creditor ".
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#### Financing Transactions
The following is a summary of financing transactions in 1969-70.
The following are explanations of tha financing transactions in 1969-70:
*Net Drawings under Credit Arrangements for Defence Purchases in the United States of America*
The *Loan (Defence) Act* 1966 and the *Loan (Defence) Act* 1968 authorized the Commonwealth to finance defence equipment purchases in the United States of America on extended payment terms. In 1969-70, finance amounting to $51 million was obtained under these arrangements. Repayments of previous drawings amounted to $54 million.
*Net Drawings under Credit Arrangements for Aircraft Purchases - Qantas and the Australian National Airlines Commission*
Repayments of aircraft loans arranged on behalf of Qantas Airways Limited and the Australian National Airlines Commission amounted to $27 million, exceeding new drawings on aircraft loans in 1969-70 by $16 million.
*Net Proceeds o] Other Overseas Borrowings*
In 1969-70 one public cash loan was raised in Germany for DM150 million. In addition a re-financing lean of SW Fr60 million was arranged in Switzerland for holders of a SW Fr60 million Commonwealth loan which matured in March. These loans yielded $48 million.
Redemptions and other expenditure on the reduction of debt overseas totalled $160 million in 1969-70. Two maturities in London were paid off at a cost of $82 million and maturities in New York and Switzerland were paid off at a cost of $11 million and $12 million respectively. Securities to the value of $20 million in New York and $12 million in London were repurchased. Repayments of $20 million were also made on borrowings from the International Bank for Reconstruction and Development and $2 million was repaid on borrowings from the Netherlands and Canada. These expenditures on the reduction of debt exceeded overseas loan raisings by $1 12 million.
*Net Proceeds of Loan Raisings in Australia*
Four Commonwealth public cash loans were raised in Australia in 1969-70. Excluding loan proceeds from advance subscriptions received before 30 June 1969 but including receipts in 1969-70 from outstanding instalments and advance subscriptions received up to 30 June 1970, the proceeds from these cash loans totalled $526 million. Cash proceeds from the sale of Special Bonds during the year totalled $134 million. Proceeds of $16 million from State domestic raisings and $2 million from Drought Bonds brought total cash proceeds from loans raised in Australia to $678 million during 1969-70.
Of the $896 million securities (other than Special Bonds) maturing in Australia which were offered for conversion in 1969-70, securities amounting to $303 million were redeemed. Redemptions of Special Bonds of all series amounted to $85 million. In addition, there were redemptions of $1 million of Drought Bonds. Other redemptions, market repurchases and contractual repayments in Australia amounted to $27 million. Total redemptions and repurchases in Australia were, therefore, $414 million, so that the net proceeds of loans raised in Australia in 1969-70 were $263 million.
*Net Change in Treasury Notes on Issue and Net Advance to the Australian Wheat Board*
There was a net decline of $1 37 million in Treasury Notes other than those involved in the provision of finance for the Australian Wheat Board. An advance of $250 million made to the Wheat Board in March 1970 to finance its repayments in respect of the 1968-69 wheat crop to the Rural Credits Department of the Reserve Bank was financed by the issue of $250 million in Treasury Notes to the Reserve Bank. Repayments received from the Wheat Board, which reduced the amount outstanding on this advance to $184 million, were applied to the redemption of Treasury Notes. At 30 June 1970 Treasury Notes on issue amounted to $252 million, a net increase of $47 million on the amount on issue at 30 June 1969.
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#### Other Financing Transactions
An amount of $45 million was available from these transactions in 1969-70. The largest item was an amount of $27 million in respect of coinage transactions, principally on account of the sale overseas of silver recovered from withdrawn coin.
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#### Residual Financing
The amount available from the financing transactions mentioned above exceeded the deficit by $33 million. Of this amount, $14 million was applied to redeem the Treasury Bills which remained on issue to the Reserve Bank at 30 June 1969. The remaining $19 million was added to Commonwealth cash balances.
STATEMENT No. 6- BUDGET ESTIMATES IN NATIONAL ACCOUNTS FORM
The presentation of receipts and outlay in national accounting form facilitates the analysis of relationships between the Budget and the economy as a whole. The following table summarizes in this form the actual outcome in 1969-70 and the prospective outcome for 1970-71. A more detailed table appears on page 47 0).
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page 60
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### RECEIPTS AND OUTLAY OF COMMONWEALTH BUDGET
The estimated increase of $802 million in total outlay in 1970-71 is $247 million greater than the actual increase of $555 million in 1969-70. In percentage terms the estimates imply an increase of 11 .3 per cent this year, compared with an actual increase of 8.5 per cent in 1969-70.
Total receipts are estimated to increase by $814 million or 11.5 per cent in 1970-71 compared with an increase of $934 million or 15.1 per cent in 1969-70.
The effects on the economy of particular classes of outlays and receipts, within these totals, differ significantly one from another. The more important distinctions for purposes of assessing the implications of the Commonwealth's transactions for demand and incomes within Australia and for the balance of payments are considered in the following sections. »') A Supplement to the Treasury Information Bulletin entitled 'National Accounting Estimates of Public Authority Receipts and Expenditure'. being published concurrently with the Budget, provides corresponding data for Commonwealth authorities outside the Budget and additional information on various aspects *of* the national accounting presentation employed in this Statement.
*Payments in Australia and overseas*
On the outlay side of the Budget there is an important distinction between payments made within Australia and payments made overseas. The immediate effects of overseas outlays are on the balance of payments(1); such outlays must therefore be deducted from total outlay as a step in the process of assessing the impact of the Budget on the domestic economy in the year immediately ahead. This is done in the following table:
The table shows that a considerable part of the greater increase in total outlay this year is attributable to the trend in the overseas component. Following a decrease of $83 million in 1969-70, overseas outlays are estimated to increase by $52 *million* in the current year(2).
After deducting overseas outlay the estimated increase in domestic outlay is $750 million compared with an actual increase of $638 million in 1969-70. This represents an estimated increase of 1 1 .4 per cent this year, compared with an actual increase of (0. 7 per cent in 1969-70. The increase in Budget outlays within Australia is estimated to be greater in 1970-71 than in 1969-70, but it is smaller than the concurrent increase in receipts. The implications of the domestic surplus for liquidity conditions are discussed in Statement No. 4.
*Composition of domestic outlay*
Within the domestic component of outlay there is a further basic distinction to be made between expenditure on goods and services, and transfers and advances from the Budget. Expenditure on goods and services adds *directly* to demand within the economy (gross national expenditure), while the impact on demand of transfers and advances depends on their effects on the spending of the recipients^). (') Such payments do not add to domestic incomes and the demand for locally-produced goods and services. Payments within Australia may add *indirectly* to overseas rather than Australian incomes, because orders met by local suppliers may include an import content Although it is not possible to make reliable estimates of the import content of Commonwealth expenditure within Australia, the proportion would not be large, and it may be assumed that it is unlikely to change markedly between one year and lbc neil. By contrast, direct payments overseas by the Commonwealth may fluctuate widely between one year and another (*) The main overseas components are shown separately in Table 2 on page. 9 of the Supplement to the Treasury Information Bulletin, entitled 'National Accounting Estimates of Public Authority Receipts and Expenditure', being published concurrently, with the Budget. (*) Whether payments from the Commonwealth Budget are themselves a source of demand for domestic resources, or add to demand indirectly by transferring purchasing power to other public authorities or the private sector, the initial impact of Budget outlays on expenditure can bc expected to induce further increases which are financed out of the incomes earned in meeting the initial change in demand. As the *relative* sizes of the total increase in demand in two successive years would depend largely on the relative sizes of the initial increases which supported them, these 'multiplier* effects are not considered explicitly in the discussion which follows.
The following table compares, for each main component of domestic outlay, the estimated increase in 1970-71 with the actual increase in 1969-70.
The estimated percentage increase in domestic, expenditure on goods and services is greater than in 1969-70. This is true also of two of the main components distinguished in the table - war and defence, and capital expenditure; the estimated percentage increase in other current expenditure, on the other hand, is expected to be marginally less than in 1969-70.
Although a rather larger increase than in 1969-70 is expected in domestic transfer payments and net advances, the estimated percentage increase in the total for this category is almost the same in both years. As noted above, the impact of these payments on demand and incomes depends on their effects on the spending of the recipients.
Grants and advances to the States are estimated to rise by 12.5 per cent in 1970-71, compared with 11 .9 per cent in 1969-70. The larger rise in these payments in 1970-71 will increase the funds available to finance the expenditures of the States and their authorities, which are predominantly expenditures on goods and services.
Cash benefits to persons are estimated to increase by 9.2 per cent in 1970-71 compared with 13.7 per cent in 1969-70. For the purpose of judging the influence of such payments on *rates* of income or expenditure *within* a year, these increases should be adjusted to remove the effects of variations in the incidence of pay-days and to allow for the 'full-year' effects of changes in rates of benefit^). After these adjustments, the estimated increase in cash benefits in 1970-71 is 9.5 per cent compared with 12.7 per cent in 1969-70. These payments would largely be spent by the recipients on goods and services.
The smaller increase in the advance to the Post Office results from a larger increase in capital expenditure on goods and services^ being more than offset by a prospective increase in internal resources associated with the increased charges for postal and telephone services.
The larger estimated increase of $120 million in other transfer payments and net advances in 1970-71 compared with the increase of $42 million in 1969-70 is mainly attributable to expected payments of $31 million under the wheat industry stabilisation scheme and $30 million in emergency assistance to woolgrowers in the current year. (') A table snowing bow this adjustment is derived appears on page 10 of the Supplement to the Treasury Information Bulletin being published concurrently with the Budget. (*) The capital expenditure of the Post Office is included with that of other authorities in the non-budget sub-sector. *See* Table 7 of the Supplement to the Treasury Information Bulletin being published concurrently with the Budget.
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#### Composition of Receipts
As on the expenditure side of the Budget, there are differences in the significance which different classes of receipts may have for prospective trends in the economy.
The distinction drawn on the outlay side between transactions within Australia and transactions overseas does not have the same practical importance here. With relatively few exceptions, the budget receipts are derived from within Australia.
Another distinction is between movements in receipts which are expected to emerge as by-products of evolving trends in incomes and spending in the economy and those which are consequential on changes in rates of taxation or other charges. Any estimated rise in receipts of the former class will reflect expected increases in incomes and spending and cannot therefore be regarded as an independent factor capable of varying those expectations. The second class of movements in receipts can be regarded as a source of influence on evolving trends(1)
It is not, in practice, easy to classify all increases in receipts in this way. For the most part, movements which would be expected in gross collections of P.A.Y.E. instalment deductions, indirect taxes and the income of public enterprises, at existing rates and charges, fall within the former class. But the position as regards movements in taxation collections at existing rates from individuals subject to provisional tax and from companies can be somewhat blurred; it depends on past trends in income and on the spending and saving habits of various classes of taxpayers. As mentioned above, the second class of movements in receipts is most clearly exemplified by new revenue measures which involve changes in rates of taxation or in other charges.
In 1970-71 there is a large increase in estimated receipts which is expected to be induced by the prospective growth in expenditure and incomes in the economy. However, the main factor on the receipts side, as regards the economic influence of the Budget, is in the changes in taxation rates for which provision has been made this year.
The reduction in personal income taxation rates at a full-year cost to revenue of $292 million will, in itself, add to spending. However, there are expected to be lags between the increase in disposable income and the changes in spending it induces; thus there will be some increase in short-term saving and, possibly, a longer-term lift in saving. There will also be lags before the disposable income of persons subject to provisional tax reflects the effects of the new tax provisions. But certainly a sizeable part of the $292 million will go to add to demand in the year ahead
The changes in excise and customs duty and sales tax - estimated to add $134 million to revenue in a full year - can be expected to have a near commensurate effect on purchasing power and hence demand. In terms of influencing the trend in demand, changes in indirect taxes of these sorts have a more immediate effect than changes in other forms of taxation.
The increase in rates of company tax, estimated to yield $81 million in a full year will, other things being equal, reduce the funds available to companies for investment and distribution to shareholders; however, the actual effects on spending and in particular the timing of those effects depend on a variety of circumstances including the ability of companies to compete for alternative sources of funds or to ' pass on ' the increased tax rates in the form of higher prices. Eventually, the increased revenue collected by the Commonwealth (') Both classes of movements m receipts will, of course, be reflected in the expected overall Budget outcome. Il might be noted that revenue estimates may sometimes reflect prospective trends in some particular areas of activity which are not the most desirable from the point of view of economic balance and reasonable price stability but which cannot, in practice, be corrected fully or quickly enough by fiscal or monetary means. An example relevant to the revenue estimates for 1970-71 is the very large increase which has been assumed in average earnings. Should average earnings rise less than assumed, taxation revenue would be less than estimated and a budget deficit would emerge (although the extent of such a deficit would not reflect the full extent of the shortfall in receipts, because some components of expenditure - for example, financial assistance grants to the States - could also be lower than estimated if average earnings rose more slowly than assumed). It would not follow, however, that the Budget objective of maintaining an environment conducive to balanced economic growth would be adversely affected by such a development; on the contrary, such a result would be more likely to serve the broad economic purposes to which budget policy is directed.
A somewhat similar observation can be made about any movement in receipts which emerges as a consequence of developments in the economy which were not foreseen at the time the Budget was framed. For example, if an increase in receipts were to result, say, from an unforeseen rise in wages, it would be misleading to say (hat. because of thai increase in receipts, the Budget bad exercised a more restraining influence than originally envisaged. as a result of the increased tax rates will be at the expense of alternative uses of the funds concerned but the chain of causation is much more complex than in the case, say, of indirect tax increases.
In summary, then, changed taxation rates will lead, in 1970-71, to an increase in indirect tax collections at an annual rate of $154 million with a quick consequential effect on spending; to a reduction in personal income taxation in a full year of $292 million with a slower and less complete effect on spending; and to an increase in company taxation of $81 million, with a fairly indirect and possibly slow effect on spending. The net effect of all these changed taxation provisions on aggregate spending in 1970-71 is likely to be very small.
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#### Review
The implications of Budget transactions, in terms of their initial impact on trends in expenditure and income in the economy, depend not on *total* outlays and receipts, but primarily on the change in domestic outlays, and on that part of the change in receipts which is not a mere *result* of prospective movements in the economy. The following considerations are therefore relevant to a comparison, from this standpoint, of the 1970-71 Budget with that of 1969-70:
{: type="a" start="a"}
0. The estimated increase of 11.4 per cent in domestic expenditure on goods and services is higher than the increase of 8.9 per cent in 1969-70, but the estimated increase of 11.3 per cent in transfer payments and net advances within Australia is almost the same as that in 1969-70. Overall, the estimated increase of 1 1 .4 per cent in total domestic outlay is not greatly different from the increase of 10.7 per cent in 1969-70;
1. On the receipt side, the reductions in personal income tax will have an expansionary influence but after taking account of the contrary influences of the increases in indirect taxation and in company tax, the net effect of these changed taxation provisions on aggregate spending in 1970-71 is likely to be very small;
2. Although the outlays and receipts of the Budget have an important influence on trends in the economy in the year ahead, the likely economic effects of a Budget can be assessed only in the context of all of the more important influences operating at the time in the economy as a whole.
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page 66
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### STATEMENT No. 7- COMMONWEALTH BUDGET TRANSACTIONS SINCE 1960-61
Tables 1 and 2 on pages 52 and 53 show Commonwealth expenditures and receipts and financing transactions since 1960-61 in 'conventional' terms. Subject to the qualifications outlined later in this Statement, the figures arc broadly consistent with the figures for 1969-70 and the estimates for 1970-71 set out in Statements No. I to 5.
Table 3 on pages 54 and 55 shows figures for each year since 1960-61 in national accounting form. In this form, transfers between different parts of the Commonwealth's accounts are eliminated so that the figures shown relate to the transactions which occur between the Commonwealth Government and the rest of the economy or overseas. These transactions are classified into economically significant categories, corresponding with those for which similar information is provided, in respect of past years, for the entire economy in the White Paper on National Income and Expenditure. The figures contained in this table are comparable with those set out in Statement No: 6. Notes on the composition of the figures are set out later in this Statement.
In each of the past years covered by the tables there was a Budget deficit. However, the size of the deficit varied from a peak of $642 million in 1967-68 to comparatively small deficits at the beginning and the end of the period - there was a deficit of $32 million in 1960-61 and a deficit of $7 million in 1969-70.
Total expenditures increased by 120 per cent to $7,088 million between 1960-61 and 1969-70. The larger items of expenditure, defence services, payments to or for the States and Works and Housing programmes and the payment to the National Welfare Fund, increased, respectively, by 175 per cent, 105 per cent and 103 per cent. The most rapid increases were 323 per cent in Commonwealth payments to industry, 257 per cent in expenditure on territories (excluding Papua and New Guinea), 21 6 per cent in departmental running expenses and 204 per cent in expenditure on external economic aid (including Papua and New Guinea).
Total receipts increased by 122 per cent to $7,08) million between 1960-61 and 1969 -70. The main factor contributing to this increase was a rise of 224 per cent in net pay-as-you-earn collections of income tax on wage and salary incomes. In 1960-61 these collections accounted for 20 per cent of total receipts; in 1969-70 they accounted for close to 30 per cent. Other income tax collections from individuals rose by 96 per cent and income tax collections from companies by 104 per cent in this period.
A feature of the financing transactions for the period as a whole is that the $402 million of Treasury Bills outstanding at 1 July 1960 were redeemed by 30 June 1970! Of these redemptions, $255 million is accounted for by funding operations in 1964-65 and 1966-67 in which Treasury Bills held by the Reserve Bank were converted to longer term securities. The balance is accounted for by the net excess of loan raisings and other financing transactions over Commonwealth deficits in the period. Though the Commonwealth's indebtedness to the Reserve Bank represented by Treasury Bills declined by over $400 million, its indebtedness represented by other securities held by the Reserve Bank rose by about $650 million in this period.
Over the period 1960-61 to 1969-70 Commonwealth Budget outlays increased as a proportion of Gross National Expenditure, rising from 21.4 per cent in 1960-61 to 23.6 per cent in 1969-70. The composition of Commonwealth Budget outlays in 1960-61 and 1969-70 is shown in the following table.
The main feature of these figures is the strong growth in Commonwealth outlays on goods and services which, since 1960-61, have increased almost twice as rapidly as Gross National Expenditure. Transfer payments and net advances grew faster than Gross National Expenditure over the period, though at a slower rate than outlays on goods and services.
The composition of Commonwealth receipts, in national accounting terms, in 1960-61 and 1969-70 is shown in the following table.
The proportion of total receipts collected by way of indirect taxes declined from 37.5 per cent in 1960-61 to 31 . 1 per cent in 1969-70, while pay-as-you-earn tax collections from wage and salary incomes increased from 20.1 per cent in 1960-61 to 29.3 per cent in 1969-70.
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page 68
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### NOTES ON TABLES 1 AND 2: FIGURES IN 'CONVENTIONAL' TERMS
The presentation of the Budget figures has been altered in that Commonwealth expenditure on the operating costs of the broadcasting and television services has been included under the expenditure item 'Other Expenditures', whereas previously these expenditures were offset against revenue from broadcasting and television services under the item 'Other Revenue'. This accounting change increases 'Other Revenue' and 'Total Receipts' in 1969-70 by $60,338,000 and also increases 'Other Expenditures' and 'Total Expenditures' by a like amount, so that the deficit is unchanged. Table 1 below sets out figures on this revised basis back to 1960-61.
Numerous changes have been made in the accounting arrangements of the Commonwealth Government since 1960-61. The figures in the tables have been adjusted where possible to produce the greatest practicable degree of consistency, but it has not been possible to remove all inconsistencies. The more important that remain are:
Other inconsistencies remaining do not involve substantial sums and arc unlikely to - affect significantly the comparability of the figures.
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#### Expenditures and Receipts
The figures for expenditures in Table 1 exclude redemptions of debt of the Commonwealth and some transfers made to trust accounts such as transfers made to the Loan Consolidation and Investment Reserve. As a number of changes have been made to the classifications of expenditures figures included in these tables differ from those in previous Budget documents.
The following notes refer to the larger adjustments which have been made to the figures of expenditures and receipts appearing in the Budget documents for earlier years:
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0. the figures for the years 1960-61 to 1967-68 have been adjusted to take account of an alteration in the accounting arrangements for the Post Office. A single payment representing the net funds provided from the Consolidated Revenue Fund is now included under the item Advances for Capital Purposes The figures for Other Expenditures and Other Revenue are also affected ;
1. operating expenditures of the Commonwealth Railways are no longer shown separately. They have been offset against revenue in order to show net receipts from this business undertaking:
2. The receipts heading 'Net Increase in Other Balances' used in the Budget documents for the years prior to 1968-69 has been dissected to distinguish between transactions which are in the nature of financing items and those which should be regarded as being in the nature of normal receipts and expenditures of the Commonwealth. The latter are included under the receipts item 'Net Increase in Other Balances of the Commonwealth in the Trust Fund'.
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#### Financing Transactions
The following notes explain the composition of some headings in Table 2 which summarises the Commonwealth's financing transactions:
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0. The figures for loan proceeds and drawings on credit arrangements include the actual cash proceeds from loans, etc. credited to Loan Fund in 1969-70 or their equivalents for earlier years. The figures for loan proceeds in Australia include amounts raised through State domestic loan raisings but exclude amounts subscribed by the Commonwealth to special loans.
1. The redemption and repayment items, both 'Overseas* and 'Australia', consist of outlays incurred in reducing the amount of debt outstanding (other than temporary borrowings by way of Treasury Bills and Treasury Notes). They include all outlays on redemptions, repurchases and repayments from the National Debt Sinking Fund and all outlays on redemptions, etc., from Loan Fund, from the Consolidated Revenue Fund and from the Canadian and Swiss Loan Trust Accounts.
2. The figures shown under the heading 'Advance to Australian Wheat Board* represent amounts outstanding in respect of Treasury Notes issued to the Reserve Bank to finance an advance to the Wheat Board and the net indebtedness of the Wheat Board to the Commonwealth in this respect. The advance, made by the Commonwealth in 1969-70, was to enable the Wheat Board to finance its repayments in respect of the 1968-69 wheat crop to the Rural Credits Department of the Reserve Bank.
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page 69
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### NOTES ON TABLE 3: FIGURES IN NATIONAL ACCOUNTING TERMS
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#### Outlay
*Net expenditure on goods and services.* This heading covers direct purchases of domestic output and imports, and includes wages and salaries of government employees and pay and allowances of defence forces. Any recoupments of such expenditures from other sectors of the economy or overseas are netted off. Current and capital expenditures are shown separately, and each is further classified by function. In accordance with national accounting conventions, all equipment purchased for defence purposes is classified as current expenditure.
*Transfer payments.* Current payments to other parts of the economy or overseas, other than payments for goods or services supplied, are listed in their various forms under this heading.
*Net advances.* Loans, advances and additional capital made available by the Commonwealth are shown in the respective items under this heading. Repayments of loans and advances are deducted to arrive at the net figures.
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#### Receipts
*Taxation.* This heading includes, in addition to the larger items listed under the item Taxation' in Table 1, some minor indirect taxes included in 'Other Revenue' in that table. Small amounts of expenditure are offset against receipts.
*Interest, rent and dividends.* Interest on loans to the private sector is not included in this item, but is treated as financial enterprises income and included in the next item.
*Gross income of public enterprises.* This item represents gross income, *less* operating expenses, of enterprises which operate within the Budget. It includes interest received on advances to the private sector, which is treated as financial enterprises income.
*Net sales of existing assets.* The principal components of this item are sales of land, houses and other buildings, *less* acquisitions of sites and existing buildings.
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#### Deficit
This item is the difference between total outlay and total receipts. It consists of net sales of Commonwealth securities other than to Commonwealth Government trust funds, *less* net purchases of other investments by Commonwealth Government trust funds, *less* the net increase in cash, *less* funds provided for the International Monetary Fund, *plus* minor changes in other liabilities.
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### STATEMENT No. 8 - EXTERNAL AID
It is not possible to calculate precisely the total amount of financial assistance which Australia provides to developing countries, including Papua and New Guinea, by way of aid from the Commonwealth Budget each year. There is also scope for differences of opinion about what constitutes 'aid'. Nevertheless, it can be said that, all told, the Commonwealth Government will provide well over $200 million for aid of one kind or another to developing countries, including Papua and New Guinea, in 1970-71.
The table below lists various items of expenditure which can be fairly readily identified as economic (i.e. non-military) aid to developing countries:
>The totals shown in this table differ from those quoted in Statement No. 2 - Estimates of Expenditures, 1970-71 by virtue of the inclusion of direct expenditures of an economic nature by various Commonwealth Departments and instrumentalities in. or in connection with, Papua and New Guinea which are classified under other headings in the Budget.
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>On this basis, official economic assistance to developing countries, including Papua and New Guinea, is estimated to total 8183,996,000 in 1970-71. This is 818,270,000, or 11 per cent, greater than actual expenditure in 1969-70. The estimates provide for an increase of $7,054,000, or 13.9 per cent, in expenditure on multilateral and bilateral programmes, excluding Papua and New Guinea, in 1970-71.
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