24th Parliament · 1st Session
The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 3 p.m., and read prayers.
– by leave - Mr. President, it is with regret that I advise the Senate of the death on 31st July of Mr. Edward John Ward, the honorable member for East Sydney. Mr. Ward was first elected to the House of Representatives at a byelection in 1931. He was, however, defeated at a subsequent general election in the same year. He was re-elected to the same seat at a by-election in 1932 and remained a member of the House from that time until his death. He was, therefore, a member of the House of Representatives for almost 32 years. At the time of his death he was regarded as one of the most senior members of the Australian Labour Party. He qualified for that seniority by the important positions that he held in the Labour Party both in the Parliament and outside the Parliament. His parliamentary record is a notable one. He was Minister for Labour and National Service from 1941 to 1943. He was a member of the Production Executive of Cabinet from 1941 to 1946. He was Minister for Transport and Minister for External Territories from 1943 to 1949. He was the leader of the Australian delegation to the thirtieth session of the International Labour Organization at its meeting in Geneva. He was a member of the Joint Parliamentary Committee on Constitutional Review and he served as Temporary Chairman of Committees in the House of Representatives. He held his political views very firmly and being, perhaps, one of the most experienced members of the Parliament, was always prominent in its debates and proceedings.
Mr. President, the late Mr. Ward was so closely associated with so many senators who represent the Australian Labour Party that I know his passing is a personal loss to them. On behalf of Government senators I should like to extend our sympathy to them on the passing of their friend. More importantly, as Leader of the Government in the Senate, I extend to his widow and family the sympathy of all members of the Senate. We all know how close were the links that bound the members of his family together. I hope that they will take some little comfort in their sorrow from the resolution which I now move -
That the Senate expresses its deep regret at the death of the Honorable Edward John Ward, former Commonwealth Minister, who was at the time of his death member of the House of Representatives for the Division of East Sydney, places on record its appreciation of his long and meritorious public service, and tenders its sincere sympathy to his widow and the members of his family in their bereavement.
– On behalf of members of the Opposition in the Senate I second the motion that has been moved by the Leader of the Government in the Senate (Senator Sir William Spooner). Each of us learned with the deepest regret on the evening of 31st July of the unexpected death of our colleague, the Honorable Edward John Ward, member of the House of Representatives for the division of East Sydney. J thank the Leader of the Government for the sympathy he has extended on behalf of the senators on the Government side to members of the Opposition in their loss.
Mr. Ward was a truly remarkable man. His span of life - 64 years - was crowded with intense activity, high endeavour and achievement in the pursuit of which he never spared himself. He had the great honour of serving as a Minister of State in the Curtin and Chifley Governments. It was widely acknowledged that he administered the Departments of Labour and National Service, Transport and External Territories with conspicuous success. He made a monumental contribution to the cause of railway gauge standardization in Australia.
As the United Nations Mission to the Territory of Papua and New Guinea acknowledged only last year, the foundations of the development of the Territory were laid during his term as Minister for
Territories. He established the principle of having local councils throughout the. Territories with representation for the indigenous inhabitants. He played a major part in the deliberations of the Constitution Review Committee extending over three years.
However, as a member of Labour Cabinets^ Mr. Ward was not content to confine himself to his own departments. He brought his keenly analytical and critical mind to bear on every submission from his ministerial colleagues, and was exceedingly quick to probe and expose any loose statements or arguments. These same faculties of mind made him redoubtable in Opposition and were excelled only by his qualities as a fighter and debater. Resilience was one of his outstanding characteristics. Always taking a strong line, and always in action, it was inevitable that his fortunes fluctuated in his party and in the Parliament. But no reverse, and no defeat even, could repress him. He would return to the attack with even greater vigour.
Mr. Ward was a speaker with a rare, electrifying quality. His extraordinary fluency, his rapid utterance, his keen argument and quick wit commanded attention and interest whenever and wherever he spoke. He made himself available unreservedly to assist his constituents in their personal problems. They attended his funeral in thousands. His services were enlisted on an Australia-wide scale to expose injustice or incompetence.
Mr. Ward lived simply and even austerely. His speech was devoid of all coarseness both in private and in public. He had no need of expletive for emphasis. His personal integrity was unquestionable. Perhaps the greatest monument to Mr. Ward, if it could be built, would consist of the things that did not happen just because of the presence in public life of a man of his vigour, ability and special qualities.
For members of the Opposition, the 31st July, 1963, marks the end of an indomitable spirit which death alone could extinguish. It is with the knowledge that Mr. Ward was a devoted family man and a consciousness of the gap that the passing of one who was so vital will leave in the family circle that we extend to his sorrowing widow and the members of his family our deepest sympathy in their bereavement.
– Mr. President, it is a simple truth to state that the Commonwealth Parliament will never be quite the same without Mr. Eddie Ward. He had become so much a part of the Parliament in his 32 years as the member for East Sydney that even for those of us who did not have close or intimate contact with him it is still difficult to realize that he is no longer with us.
He was a staunch Labour man of wide experience and considerable ability, loyal to his colleagues and liked and trusted by them. It is no exaggeration to say that he was held in high regard by his constituents, and he returned their affection in a warm, personal way. These are the qualities that we recall to-day and for which he will be remembered in the years to come. His possession of such qualities explains why it was that, whilst he never pulled his punches for fear of making enemies, he nonetheless ended his career with many more friends than antagonists. If it must be said that he fought hard, it can also be said that he lived fully and fought well.
It is with great sincerity, therefore, that we of the Australian Country Party extend our sympathy to his sorrowing widow, daughter and son.
– Mr. President, on behalf of the Australian Democratic Labour Party I wish to extend condolences to Mrs. Ward and her family upon the death of her husband and their father. Eddie Ward was respected greatly by his colleagues and his opponents. He stood by his convictions in all circumstances.
Question resolved in the affirmative, honorable senators standing in their places.
– Mr. President, I suggest that, as a mark of respect to the late Mr. Ward, the sitting of the Senate be suspended until 8 p.m.
Sitting suspended from 3.13 to 8 p.m.
Assent to the following bills reported: -
Appropriation Bill (No. 2) 1962-63.
Appropriation (Works and Services) Bill (No. 2) 1962-63.
Public Works Committee Bill 1963.
Processed Milk Poducts Bounty Bill 1963.
Insurance Bill 1963.
Commonwealth Inscribed Stock Bill 1963.
Acts Interpretation Bill 1963.
Australian Antarctic Territory Bill 1963.
Christmas Island Bill 1963.
Cocos (Keeling) Islands Bill 1963.
Heard Island and McDonald Islands Bill 1963.
Seat of Government (Administration) Bill 1963.
Supply Bill 1963-64.
Supply (Works and Services) Bill 1963-64.
Papua and New Guinea Bill 1963.
Evidence Bill 1963.
Parliamentary Papers Bill 1963.
United States Naval Communication Station Agreement Bill 1963.
Loan (Australian National Airlines Commission) Bill 1963.
Loan (Qantas Empire Airways Limited) Bill 1963.
Pay-roll Tax Assessment Biil 1963.
Income Tax and Social Services Contribution Assessment Bill 1963.
– I lay on the table the following papers: -
Civil Works Programme 1963-64.
Commonwealth Payments to or for the States 1963-64.
Estimates of Receipts and Summary of Estimated Expenditure, for year 1963-64.
Particulars of Proposed Expenditure for service of year 1963-64.
Particulars of Proposed Expenditure for Additions, New Works and other Services involving Capital Expenditure, for year 1963-64.
Government Securities on Issue as at 30th June, 1963.
Income Tax Statistics.
National Income and Expenditure 1962-63 - and move -
That the papers be printed.
By way of explanation, I should point out that the “ Estimates of Receipts and Expenditure “ no longer appear in that form. In addition, the papers issued in former years under the title of “ The Budget “ have been discontinued. An explanatory memorandum on the new form of the documents is being distributed to senators.
To-night, the Treasurer (Mr. Harold Holt) is delivering in another place his Budget speech for 1963-64. I am happy to be able to give the Senate an outline of the Budget under conditions as propitious as those which rule in the Australian economy to-day. On the one hand, we can look back on a year of strong, continuous, widespread growth; on the other, we can look forward to possibilities at least as favorable - and in all probability more so - in the current year and perhaps beyond.
The gross national product may be taken as a broad measure of activity and output. In 1962-63 this was 8 per cent, greater than that of 1961-62. Prices were generally stable through the year so that increase can largely be regarded as growth in real terms. It was quite a high rate of growth even though measured against a year when some slackness prevailed.
It was a good production year - notably so in the rural field, where several of the main industries achieved records in output. There was higher activity in building and construction, transport and communications and a generally greater volume of trade. Externally, the year brought excellent results. Exports reached the record total of the previous year and gave a favorable trade balance of £33,000,000. Imports rose considerably, but this was partly due to re-building of stocks and partly a response to greater industrial activity within Australia. The total for the year cannot be regarded as excessive. Private capital inflow continued strongly and the Commonwealth was able to obtain some £66.000.000 from loans abroad. This, incidentally, was a record sum for any one year. Over the year, our holdings of gold and foreign exchange rose by £65,000,000 and, at 30th June, stood at £626,000,000. In addition, our drawing rights at the International Monetary Fund now stand at £223,000,000.
It was a year of expansion and yet, signifying much, it was also a year of stability. Consumer goods prices changed little. The supply of goods and services seems on the whole to have been adequately matched by demand. This demonstrates in actual experience a great fact - one which the Government has consistently asserted - the fact that stability of costs and prices and economic growth can and do go together. Tt would be difficult to show that any one has lost through stability. Wage-earners have gained by it; for although nominal wage rates have been more or less stable for a considerable time, average earnings have increased: this means that, with prices stable, average living standards have improved. For the most part, too, the business world seems to have got along well under stable price conditions. The Commonwealth Statistician estimates that incomes of indus:ria and trading companies in 1962-63 were 11 per cent, above the comparatively low year of 1961-62 and were thus approximately as high as they were in the boom year 1959-60. Most businesses other than companies also gained ground.
The Government regards stability as important on both economic and social grounds. We see it as a prime condition of sound economic growth. But we have never thought of it as sufficient in itself to achieve all that we want to achieve. We do not believe that it will necessarily provide the vital impetus which growth requires. That impetus must largely, if not entirely, find its origins elsewhere.
Governments have long accepted the function of providing conditions favourable to growth; and stability is probably the most important of those conditions. But, increasingly as the years have gone on, governments in the Commonwealth, and this Government in particular, have been prepared to use their powers and resources to promote growth actively. They have sought to do this partly by extending their own facilities and services, as in transport and communications and research, partly by assisting the State governments to enlarge their services and developmental activities, and partly by direct aids and incentives to private enterprise. In this respect, of course, we have recognized that private enterprise, which provides three jobs out of every four in our economy, must always have a crucial role in growth.
Each year our developmental activities in the Commonwealth widen and take on greater variety. This year we again propose to add substantially and in a variety of ways to our provision for these activities.
It gives me pleasure to announce that the Government has decided to set an immigration target for 1963-64 of at least 135,000 permanent and long-term arrivals, an increase of 10,000 on the target for last year.
We expect this, after taking departures into account, to result in our securing at least 100,000 new settlers.
Within the overall programme for the year, provision will be made for 45,000 British migrants under the assisted passage scheme, which will be the largest intake of assisted British migrants in any financial year since the post-war immigration programme began. There will be special emphasis in the programme on attracting professional people, skilled tradesmen and other key types of workers.
This year, as announced some weeks ago, the Government has agreed to the Loan Council borrowing programmes for works and housing being increased in the current year by the large amount of £17,000,000 to a record total of £272,000,000. In the event of a short-fall in borrowing, the Government will, as in other years, stand ready to support the programme from its own resources. Along with these governmental programmes goes a borrowing programme of £122,800,000 for semigovernment and local authorities with programmes of more than £100,000. This also is a record figure and involves an increase of approximately £10,000,000. In addition to these, there, is the borrowing programme for smaller authorities. Formerly, there were overall Loan. Council limits on the borrowings of these smaller authorities. On the initiative of the Commonwealth these limits have been removed.
Of all the fields for social development, none has stood higher in our order of priorities than housing. We are again this year providing upwards of £90,000,000 for expenditure on housing, the greater part of it on new dwelling construction, but a significant part also for the purchase of existing homes. In addition, we have encouraged the flow of housing finance from institutional sources and support for housing from this quarter is now rising rapidly. In the recent June quarter the number of loans approved by institutions for new housing was 9,770 compared with 7,847 in the March quarter and 6,419 in the June quarter of 1962. The amount, as distinct from the number, of such loans is increasing still faster. In the June quarter the amount approved was no less than £30,270,000, an increase of £7,180,000 or 31 per cent, over the March quarter, and £12,490,000 or 70 per cent, over the June quarter of last year.
The savings banks are to-day the largest institutional lenders for housing purposes. They have in recent times increased very greatly their rate of housing loan approvals. The aggregate rate of such approvals by all savings banks has lately been around £100,000,000 per annum. This is almost double the rates of 1960-61 and 1961-62. We have recently taken action designed to improve the position still further.
The provisions of the Banking (Savings Banks) Regulations at present limit investments by the savings banks of depositors’ funds in housing loans to not more than 30 per cent, of current balances of their depositors. We have had discussions with the savings banks which are subject to the regulations about the possible effect of these provisions. Although the provisions have not to date operated to cause the savings banks to restrict their rate of housing loan approvals, it is apparent that the time is coming when they could have a restrictive effect, particularly in the case of one or two of the banks.
The Government has therefore decided to amend the regulations. We will do this in such a way as to enable the savings banks concerned to invest up to 35 per cent, of their depositors’ balances in housing loans. The detailed amendments of the regulations to give effect to this decision will be promulgated in the near future.
The amendments will reduce from 70 to 65 per cent, of depositors’ balances the minimum amount a savings bank is required to hold in cash and in government securities. In addition, a savings bank’s deposits with banks other than the Reserve Bank and loans by a savings bank to authorized dealers in the short-term money market will become permissible forms of investment within the “ 65 per cent, items “, the effect of this being to increase further the scope for investment in housing loans. A special provision will also be included in the regulations so that the permissible extent of a savings bank’s investments in housing loans will not be subject to reduction in the event of a temporary fall in the savings bank’s depositors’ balances. Taken together, these amendments should ensure that the savings banks concerned will be able to keep up a steady rate of increase in their lending for housing purposes.
I turn now to rural industry. Rural industry is still the great mainstay of our export earnings abroad. It has put up a remarkably fine production performance in recent years. Overseas prices are still relatively adverse, despite some recent improvement. In the face of this, it is vital to keep up the rate of improvement in productivity which these industries have achieved. In the Budget we propose three new measures to that end.
Provision is made in the Budget for the introduction of a bounty on superphosphate at the rate of £3 per ton. The estimated cost in 1963-64 is £7.000.000 and in a full year about £9,000,000. The purpose of the bounty is to stimulate increased use of superphosphate as a means of improving st:ll further the productivity of farm lands and pastures. Details of the bounty scheme will be announced to-night bv nv colleague, the Minister for Customs and Excise (Senator Henty). and legislation will be introduced as soon as possible.
Investment Allowance on Plant and Equipment.
It is proposed that primary producers be granted an investment allowance at the rate of 20 per cent, on new plant and equipment other than Toad vehicles. This allowance will be additional to the special 20 per cent, depreciation allowance. It win apply to new plant and equipment on which expenditure is incurred after nth August. 1°63. under contracts entered into after that date. The consequence of this concession will be that, in future, primary producers will be able to claim in the year in which eligible new plant and equipment is first used or installed ready for use investment and depreciation allowances totalling 40 per cent, of the cost of the asset. The cost of the proposal to revenue is estimated to be £3.00(1 000 in a full year an-‘ £1.000 000 in !96’?-64 A statement giving further details of Re investment allowance will be made shortly.
The Government has decided to provide a further amount of £5,000,000 towards, the capital of the Commonwealth Development Bank. The Development Bank has now been operating for about three and a half years. In that time it has made a significant contribution in its special field. Since its establishment it has approved loans to primary and secondary industry of the order of £37.000.000 and has provided valuable assistance by way of hirepurchase finance for producers’ equipment.
The capital of the bank on its establishment was about £16.000.000. In 1961-62, the bank’s capital was increased by a further £10.000,000. The £5,000,000 now to be provided will raise it to nearly £31,000.000. Besides this, the bank has substantial reserve funds and the use of considerable loan moneys. The total resources available to it after the provision of the £5.000,000 additional capital will be approximately £70,000,000. The provision of the additional capital will assist the bank to maintain and, indeed, increase its contribution to primary and secondary industry. Legislation to make the necessary amendment to the Commonwealth Banks Act 1959-1962 will b; introduced during this session.
Besides its various measures to assist rural industry, the Government has, of course, been undertaking more and more commitments to provide financial assistance to State Governments for developmental projects of a major kind. The Mount lsa railway, the beef roads programme, the brigalow lands development, the coal ports in New South Wales and Queensland and the Kalgoorlie-Kwinana railway are examples of projects started earlier.
Some months ago, we agreed to join with New South Wales, Victoria and South Australia in constructing, under the River Murray Waters Agreement, a big storage reservoir on the Murray River at Chowilla in South Australia. The cost is estimated to be of the order of £14,000,000 and of this the Commonwealth will itself find onequarter. It will also advance to the State of New South Wales on agreed terms the share of that State in the cost of the project.
As announced some time ago, we have agreed to provide to South Australia all the funds needed1 to convert the Broken Hill to Port Pirie railway to standard gauge, the State subsequently to repay 30 per cent, of the amount advanced over a period of 50 years. The cost of this project will be of the order of £20,000,000, and provision has been made for expenditure of £1,680,000 in 1963-64. The Commonwealth has now undertaken to provide finance for two further projects of large significance.
Discussions have taken place between the Commonwealth Government and the Government of New South Wales on the question of construction of a dam at Blowering on the Tumut River, provision for which was included in the Snowy Mountains Agreement of 1957.
I am pleased to announce that arrangements for construction of the Blowering storage have been agreed between the Commonwealth and New South Wales Governments. The arrangements provide for the bulk of the work involved to be undertaken by the Snowy Mountains Hydro-electric Authority as agent and for Mie account of the State of New South Wales. The Commonwealth will provide financial assistance to New South Wales in the form of repayable interest-bearing loans to the extent of one-half of the cost of the project. The State for its part will undertake to make the necessary provision for the use on irrigated farms of the additional water that the project will provide. Legislation to approve an agreement between the Commonwealth and the State will be introduced in the near future.
Over the past five years wc have provided special assistance to Western Australia amounting to £6,500,000 for expenditure on a number of development works in the northern part of the State. This amount comprised a general assistance grant of £5.000.000 - the greater part of which was applied to the construction of the recently completed Ord River Diversion Dam and other works associated wilh the first stage of the Ord River irrigation project - and provision during the two years just com pleted of £1,200,000 for beef cattle roads and £300.000 towards the cost of a new jetty at Derby.
Under the beef cattle roads arrangement we have undertaken to provide a further £2,250,000, at a rate of” £750,000 a year for the next three years, and, in addition, there is a further amount of £500,000 to be provided in 1963-64 and 1964-65 for completion of the Derby jetty.
We believe that the development of this remote area calls for a level of special expenditure higher than that arising from these continuing commitments, and we have therefore offered Western Australia a further provision of £3,500,000 for expenditure during the next three years. The addition of this amount will mean that, over these three years, the Commonwealth will be providing special assistance of £6,250,000 for expenditure in the area, representing a considerable stepping-up of assistance as compared with the £6,500,000 made available in the preceding five years.
It is proposed that the new provision of £3,500,000 will be used for the construction of a deep water jetty at Broome, for further supply and drainage channels and associated works within the first stage of the Ord River irrigation project, and for such other works in the area as may be agreed. This further assistance will require negotiation of a Commonwealth-State agreement and the submission of special legislation to Parliament for approval. For expenditure in 1963-64 we have provided £1,000,000 for these new projects, £750,000 for the beef cattle roads, and £350,000 for further work on the Derby jetty, a total of £2,100.000.
So much for specific developmental undertakings. We expect to be spending on them this year a total of £20,600.000. The comparable expenditure last year was £15,400,000.
In the Northern Territory we now have the beef roads programme, estimated to cost £4.570,000; towards that programme an amount of £1,200,000 is being provided in this Budget. Besides this, we expect to spend £7,386,000 on other capital works and services in the Territory including housing, schools, hospitals, municipal services and pastoral improvement. Amongst other things, a start will be made on the extension of the Stokes Hill wharf at Darwin, estimated to cost £430,000, and a laboratory building for animal husbandry research at Alice Springs, estimated to cost £180,000. .
The grant to the Papua-New Guinea Administration will this year be increased by £5,250.000 to £25,250,000. This is an increase of a full 25 per cent, in the funds made available to the Territory. It is the highest proportionate increase of any major item in the Budget. It provides further evidence of the determination of the Government to achieve the fastest practicable rate of progress in that region.
We have made a decision to constitute in the Department of National Development a national materials handling bureau. This is of a small order financially, but it is likely to contribute usefully towards efficiency and reduction of costs in transportation. The existing Materials Handling Branch of that department will be taken over and strengthened. It is envisaged that the new bureau will be a permanent coordinating authority for materials handling practices. It will expand existing research, advisory and administrative services to cater for industry as well as the armed services and government departments. Funds will be provided to the bureau up to a maximum of £60,000 a year. I may say that the decision to establish the bureau follows upon a recommendation to the Government by the Export Development Council.
Total Commonwealth expenditure for all purposes in 1963-64 is estimated to be £2,280,700,000, an increase of £197,300,000 over expenditure in 1962-63.
Expenditure on items usually charged to the Consolidated Revenue Fund is estimated to be £1,912,800,000 an increase over last year of £174,600,000. I shall refer here only to the major items in this total.
The amount to be provided for defence is £251,671,000 which, after allowing for the effect of certain accounting changes, represents an increase of £30,300,000 over expenditure in 1962-63. The Prime Minister (Sir Robert Menzies) announced on 22nd May that there is to be a large expansion in the three armed services, a speeding up of their re-equipment and further development of their strategic and tactical mobility. These measures follow upon a full review of developments in South-East Asia in the light of our treaty arrangements. They have particular reference to the security of Australia itself and of Papua-New Guinea. The scale of our expenditure on defence will progressively increase over the next few years as strengths build up and new equipment comes to hand.
In the field of Social Services, the Government proposes some major additions to benefits now available.
This year we propose an important innovation, which experience has demonstrated to be most desirable. By adding 10s. per week to their pension, we are providing that a new standard rate of £5 15s. a week will be paid to single age and invalid pensioners. That standard rate will also be paid to widow pensioners with one or more children. Pensioners whose spouses do not receive a pension or allowance will count as single persons for the purpose of the increase. It is estimated by the Department of Social Services that approximately two-thirds of existing pensioners - some 516,000 out of a total of 786,000 pensioners - will be eligible for this new benefit.
Next, in addition to the new standard rate of £5 15s. a week, widow pensioners with one or more children will receive a further £2 a week by way of a mother’s allowance, and will be paid an allowance of 15s. a week for their eldest or only child. All widows with one or more children will, through these measures, receive an increase of £3 a week in the pensions now available to them. The total payment for a widow with one child will be £8 10s. a week at the new standard rate plus allowances and will be increased by 15s. a week for each child after the first. Widows without children will receive an increase of 10s. a week, which will bring their rate to £5 2s. 6d. a week.
Supplementary assistance on the present basis will continue to be paid to qualified pensioners. The combined pensions payable to a married couple, both pensioners, will remain at £10 10s. a week. The wife’s allowance payable to the wife of an invalid or a permanently incapacitated age pensioner will be increased by 12s. 6d., the new rate being £3 a week. The increase in pension for each child of these pensioners after the first will be raised to 15s. a week instead of 10s. as at present.
Payments at the rate of 15s. a week will be made to invalid and permanently incapacitated pensioners and to widows in respect of children undergoing full-time education up to the end of the year in which such children attain the age of eighteen years. At present such payments cease when the child attains the age of sixteen years.
The total additional cost of these pensions and allowances is estimated at £17,755,000 for a full year and £11,435,000 in 1963-64.
Another proposal is for legislation to enable the Commonwealth to make subsidies, on a £2 for £1 basis, to churches and approved voluntary welfare organizations towards the provision of accommodation for disabled persons working in a sheltered workshop so that they may reside near their place of employment. It is not known what amount will be sought by way of subsidies in 1963-64, but grants will be made to all organizations that satisfy the requirements. A sum of £150,000 has been allocated for the purpose.
The Government has also, in accordance with its practice each year, reviewed repatriation benefits, and here also it has some important proposals to make. The special (T.P.I.) rate war pension is to be increased by 10s. from £13 5s. to £13 15s. per week. The domestic allowance payable to war widows who are over 50 years of age, are permanently unemployable, or have a child under the age of sixteen years, or over that age but undergoing approved education, is to be increased by 7s. 6d. from £3 2s. 6d. to £3 10s. per week.
There is to be an overall increase of 15 per cent, in the rates of educational allowances payable in respect of children under the Soldiers’ Children Education Scheme other than professional students.
There will be increases for certain service pensioners, consequent upon increases approved for social service pensioners. The “ single “ member service pensioner is to receive an increase of 10s. per week from £5 5s. to £5 15s. “ Member “ service pensioners who are permanently unemployable and who have children are to receive an increase in their service pension of 5s. per week in respect of a second and each subsequent child. The service pension payable to a wife is also to be increased by 12s. 6d. from £2 7s. 6d. to £3 per week.
These proposals are estimated to cost £2,173,000 in a full year and £1.581.000 in 1963-64.
Payments to the States.
Payments to the States this year are estimated to reach £448,925,000, an increase of £25,704,000 over last year. The total includes, along with provision for many earlier-established commitments, provision for expenditure on the majority of the special development projects I mentioned earlier. We are again making an additional assistance grant to the States this year of £20,000,000 for expenditure on employment-giving activities. This £20,000,000 is included in the total mentioned. The amount provided last year for that purpose was £17,500,000.
The 1964-66 triennium for grants for the universities is at hand and the provision to be made for this will be a matter for consideration after the Australian Universities Commission has reported. Provision for Commonwealth open entrance scholarships will be reviewed at the same time.
Total expenditure on Capital Works and Services is expected to be £195,791,000, an increase over last year of £16,232,000. Within this total, an amount df £13,100,000 on account of the Snowy Mountains Authority will be charged to Loan Fund. There it will be financed from drawings against the $100,000,000 loan raised in 1962 from the International Bank for Reconstruction and Development.
The large range of items which come under the heading of Departmental Expenditure is estimated to total £177,649,000. The apparent increase of £26,700,000 over expenditure last year is partly the result of accounting changes and it also reflects the recent increases in wage and salary margins. These increases also affect, in particular, expenditure on defence services and business undertakings. On the best estimate that can be made, the cost to the Budget this year of margins increases so far granted will be of the order of £13,600,000.
The Government has again given careful thought to the position of persons receiving pensions under these schemes. Many of these pensions are being paid to or in respect of persons who retired from the Commonwealth’s service many years ago. The real value of their pensions has been materially affected by changing conditions since then and, in recognition of this, the level of the earlier pensions has been increased on several previous occasions. The Government now proposes to provide further relief by bringing the Consolidated Revenue share of these pensions up to a level comparable with what would have been payable by the Commonwealth had the pensions been determined under the scale set out in the Superannuation Act 1959 and applied to the level of salaries that reflected the marginal increases of 1959. The cost of these increases is estimated to be £1,088,000 for Superannuation Act pensioners and £315,000 for Defence Forces Retirement Benefits Act pensioners in 1963-64, and lesser amounts in succeeding years.
The Government will also bring down legislation to correct the pattern of entitlements to contribute, so that the ratios of pension to salary that were adopted for contributors in the 1959 legislation will be restored and preserved in the future. The opportunity will be taken at the same time to modify the over-abrupt tapering of the entitlements to contribute, which commences to operate at salaries above the lower middle ranges.
Over and above those expenditures which we normally meet’ from Consolidated Revenue, there are the Loan Council borrowing programmes for works and housing in 1963-64, which, subject to the usual conditions, we have agreed to support. The amount is £272,000,000 of which it is estimated that £5,000,000 will be met from State domestic raisings. Chargeable to Loan Fund also are expenditures on war service land settlement, estimated to be £4,225,000, and on the Mount Isa railway project, for which £6,700,000 is being provided. Redemptions of debt this year are estimated at about £90,000,000, which is approximately the same as in 1962-63.
Hence, so far as we can at present see, the total expenditures for which finance will have to be found in 1963-64 add up to £2,280,700,000. I turn, now, to the large question of how a sum of that magnitude can or should be raised.
Taking taxation as it stands, we estimate that receipts from that and all other sources except borrowings in 1963-64 would amount to £1,935,000,000, which is £152,700,000 more than was raised from those sources last year.
A number of factors will help to increase taxation revenues in the current financial year - the strong rise in business incomes and in rural incomes last year, the expected rise in wage and salary earnings through this year and also the rising trend in sales and imports of goods subject to tax.
On the other hand, tax revenues are now bearing the full cost of the major concessions granted in 1961-62, such as the rebate of ls. in the £1 on individual income tax, the investment allowance on plant for use in manufacturing and the sales tax reductions on household equipment and motor vehicles. These items are estimated to be costing the Budget currently about £80,0*00,000 a year. Nevertheless, it is expected that, without any further concessions, taxation revenue this year should show an increase of £132,000,000 over that Of 1962-63.
We have, T may say, gone very thoroughly into the whole question of what should be done about taxation under present circumstances. We have looked at it from the stand-point of the economy and its prospects, the trend of our expenditure commitments, the prospects of borrowing not only in this year but thereafter, and the likely future yield of our tax system, affected as it has been by the quite large concessions made in the past couple of years. We have reached two broad conclusions: One, that there is no present justification, for sweeping tax reductions to stimulate spending or to encourage investment; the other, that it would be courting later trouble if we were to cut drastically into the sources from which our main revenues are drawn. Our annual Budget now has to provide for expenditures already about £2,300,000,000 and rising fast. Nevertheless, it has seemed possible to make a considerable number of concessions which will correct anomalies in the present tax system, or give relief in quarters where taxation now bears rather heavily, or provide some aid and encouragement to particular branches of production and trade.
It has now been decided to remove completely sales tax from all foodstuffs remaining subject to that tax. The proposed exemption will not, however, extend to confectionery, carbonated beverages and aerated waters. There will be a cost to revenue of £11,500,000 in a full year and £9,000,000 in 1963-64.
A number of other sales tax reductions and exemptions are proposed. Details of these will be made available in the legislation which will be introduced in the House of Representatives, immediately after the bringing down of the Budget. Amongst the more important are the exemptions proposed for polythene, metallic foil and metal materials used in manufacturing or building construction, and a reduction from 12i per cent, to 2i per cent, in the rate payable on household goods of silver-plated ware. This 1 per cent, is the rate now generally applying on household equipment.
As to income tax, the Government has had before it for some time the report of the Commonwealth Committee on Taxa tion which contains a number of important recommendations for changes in the income tax law. Some of these recommendations have far-reaching importance and they involve most complex issues. A great deal of study has been given to them and this work is continuing. The Government has, however, decided to adopt, now, a considerable number of those recommendations of the Commonwealth Committee on Taxation which the committee thought would simplify the existing law or remove vexatious anomalies. I propose to refer here only to the more important recommendations which the Government has decided to implement at this stage.
One recommendation of the committee to be adopted is that the minimum income subject to tax be increased to £209 from the present figure of £105. This will reduce the number of persons required to pay income tax and, in consequence, make possible some savings in the administrative costs of the taxation office.
Individuals maintaining a dependant of any class will benefit from a proposal to apply a uniform test as to whether the separate net income of that dependant should reduce the amount of the deduction otherwise allowable. In future, the allowance for a dependant will not be reduced unless a dependant’s separate net income is more than £65. Where the separate net income exceeds £65, the allowance will be reduced by £1 for every £1 by which the separate net income exceeds £65. The cost to revenue of this and the preceding proposal is estimated to be £960.000 in a full year and £305,000 in 1963-64.
Another proposal relating to separate net income will, I am confident, meet with the approval of parents of student children. Under the existing law the maintenance deduction for a student child is reduced by the amount of any Government assistance received towards the education of that child. It has now been decided to adopt the recommendation of the Commonwealth Committee on Taxation that Government assistance towards the education of a student child, in the form of payment of fees and similar expenses, should not be taken into account in determining the deduction available for the maintenance of a child. Government assistance towards the maintenance of the child will be regarded as the child’s separate net income which, however, may now be as much as £65 before affecting the amount of the deduction allowable to the parent.
In accordance with its policy of assisting education generally, the Government has decided that the maximum allowance for education expenses should be raised from £100 to £150.
It is proposed that, in the case of medical expenses, the present maximum limit of £150 per person should be removed entirely. The existence of a limit undoubtedly works to the detriment of a taxpayer when he is in most need of assistance - that is, when he is faced with exceptionally high medical costs for himself or members of his family.
In conformity with the Government’s proposal to increase by 10s. per week the age pension for single persons, it is proposed that the age allowance exemption for aged persons not assessed as married couples be increased by £26. The new exemption for these aged persons will therefore be £481, which is equal to the sum of the proposed age pension for a single person and the permissible income. In addition, the Government has decided to adopt the recommendation of the Commonwealth committee to extend the married couples provision to an aged person whose spouse is not of pensionable age. In consequence, an aged person will be exempt from tax, regardless of the age of the spouse, if the combined net incomes of husband and wife do not exceed £910.
A further group of recommendations of the committee which the Government proposes to adopt will, I believe, give welcome relief to a considerable number of persons engaged in business. The most important of these is that a fourth basis of valuation of trading stock be introduced. This new basis will permit taxpayers to adopt an alternative basis of valuation for certain trading stock, subject to the Commissioner of Taxation being satisfied that there are circumstances which justify such a course.
A number of other amendments are proposed which will permit taxpayers to deduct certain business expenses - generally of small amounts - which would otherwise be subject to inquiry or not deductible at all because they would rank as capital expenditure. The cost to revenue of all these proposals is estimated to be £2,440,000 in a full year but there will be no cost in 1963-64.
Other recommendations to be adopted include the treatment of forestry, including the extraction of timber, as primary production for income tax purposes, the allowance of deductions in respect of mill buildings and employees’ houses in the logging area and the allowance in the year of expenditure of the cost incurred by primary producers in erecting fences for animal pest prevention purposes and for control of salt-affected land.
I have mentioned elsewhere our intention to provide an investment allowance on new plant and equipment purchased by primary producers.
A second proposal which, though not of wide scope, will be of considerable importance to the people affected, is that primary producers should be allowed to deduct each year one-tenth of the cost of contributions made for the extension of telephone services to property used for the purposes of primary production. In the past these contributions have not been deductible either by way of depreciation or outright deduction from income.
The Government has given consideration to the amounts which, under the present law, private companies are allowed to retain free of undistributed income tax. This was a matter which the Commonwealth committee examined and on which it made a recommendation. The Government is satisfied that some increase in existing retention allowances is justified, so that private companies will be encouraged to retain a greater proportion of their income to finance expansion. It is accordingly proposed that the retention allowances for income other than property income should be increased to 50 per cent, of the first £5,000 of distributable income - broadly, the taxable income less primary tax payable - 45 per cent, of the next £5,000 of distributable income and 40 per cent, of the balance. Because dividends declared by private companies up to ten months after the close of their year of income may be taken into account in determining their liability to undistributed profits tax, it is proposed that this increase should apply in respect of 1962-63 incomes. The cost to revenue of the proposal is estimated at £2,500,000 in a full year and £1,500,000 in 1963-64.
It is also intended to adopt a recommendation of the Commonwealth committee which would extend in certain circumstances, and subject to the agreement of the commissioner, the prescribed period of payment of dividends by a private company.
It is proposed that, apart from the increase in retention allowances and the 20 per cent, investment allowance on farm plant and equipment, the projected amendments to the income tax law should take effect from the commencement of the 1963-64 income year.
In respect of estate duty, the Government had before it a number of representations - in particular to the effect that a rebate should be provided, along the lines of Victorian and South Australian legislation, in respect of agricultural land included in deceased estates. However, after going into the matter fully, the Government reached the view that, to preserve equity between all classes of taxpayers and yet go a considerable way to serve the purposes sought by these representations, the best thing to do is to raise further the exemption limits provided under the act. It is therefore proposed to double the existing exemptions and to shade them out more slowly than at present. In consequence, where an estate of a person who dies after the authorizing legislation has been assented to, is of a value of £10,000 or less and passes to a widow, widower, children or grandchildren, no duty will be payable. In other cases, duty will not be payable unless the value of the estate exceeds £5,000. In addition, the rate at which these exemptions will diminish is to be reduced. They will, in future, be reduced by £1 for every £4, instead of the existing £1 for every £3, by which the value of the estate exceeds the appropriate exemption.
Further details of all these concessions are given in Statement No 3 and addendum attached to the Treasurer’s speech. In total they are expected to have a cost to revenue of £12,800,000 in 1963-64 and £27,600,000 in a full year.
In accordance with its policy of seeking progressively to recover from air transport operators the cost of maintaining and operating airport and airway facilities, the Government has decided that the present rates of air navigation charges payable by all classes of users will be increased by 10 per cent. This increase will take effect from 1st January, 1964.
Other receipts include the business undertakings, from which we expect to get an additional £10,200,000 of revenue this year, and the National Debt Sinking Fund of which the receipts are expected to be about £87.000,000, approximately £5,300,000 more than in 1962-63.
Thus, after allowing for the proposed tax concessions, total receipts other than from borrowings are estimated to be £1,922,300,000 and the short-fall on estimated expenditure commitments becomes £358,400,000.
This amount of £358,400,000 will have to be obtained from borrowings in one form or another.
In 1962-63 we succeeded in raising from loans in Australia and abroad a total of £323,000,000. This was far more than had ever been raised before in a peace year and was £108,000,000 more than we had reckoned on being able to borrow at the time of the 1962-63 Budget.
Without doubt, conditions last year were exceptionally favorable for loan raising within Australia and also abroad, where good fortune certainly had a part. On the domestic market, the basic factor was probably the. great increase iti the supply of money available to the public in the shape of bank deposits and cash. Over the year it rose by 8.6 per cent, and this followed an increase of 7.5 per cent, in 1961-62. Savings bank deposits alone rose by some £235,000,000. It was also an important fact that when, in the second half of the year, expectations of a fall in the long-term bond rate gained currency, some investors sought to put as much money as they could into securities at the prevailing rates. There was throughout the year a gratifying degree of support for special bonds, a net total of £31.000,000 being subscribed to these securities and that trend, I am glad to say, has continued to be evident in this financial year.
Overseas, we were able to raise three loans in New York, which was quite unprecedented, and also a cash loan in London which had not seemed possible at the time of the Budget.
As to prospects in 1963-64 it is, frankly, not possible to estimate with any certainty how much may be raised from public loans either in Australia or overseas. At home we can reasonably suppose that monetary conditions will continue liquid throughout the year. It is likely too that, while spending by the public will increase, the rate of savings will continue high. On the other hand, bond yields are now appreciably lower than last year and the competition of other securities could be stronger in the period ahead than it has been for some time past.
Overseas prospects for borrowing are distinctly poorer than they were last year when, as I mentioned earlier, we obtained a total of £66,000,000 from various sources. Apart from anything else, the proposed interest equalization tax on new issues of foreign securities recently announced by the United States Administration gives rise to considerable doubt as to whether we will be able this year to raise further public loans in New York. Other sources do not at the moment look particularly promising. We will, however, be able to draw further upon the outstanding balance of the International Bank loan for the Snowy Mountains Authority.
Very tentatively - indeed, I might say even speculatively - I am suggesting a figure of £300,000,000 for loan raisings in 1963- 64. I do this with a full recognition that the - actual result could differ from that figure by a considerable margin one way or the other and for reasons which, at the present time, it is quite impossible to foresee.
If that figure in fact proved to be somewhere near the mark, there would remain a gap of some £58,400,000 between our expenditure commitments on the one hand and the total of revenues and loan funds on the other. This gap would have to be bridged by temporary borrowings.
On present estimates, moreover, expenditure of the kind usually charged to the Consolidated Revenue Fund will exceed the revenue of that fund by £62,500,000. To avoid a deficit in that fund, I am proposing that expenditure on defence services to the amount of £62,500,000 should be charged to the Loan Fund. It will be necessary to seek borrowing authority for that purpose, and it is therefore proposed to ask Parliament to authorize borrowings of £62,500,000 to meet expenditure on defence services.
In shaping the Budget we have necessarily given a lot of thought to the probable requirements of the economy over the next twelve months or so, and to the effect that budgetary measures might be expected to have on the general trend of activity. We are quite clear that a good rate of expansion can be kept up through 1963-64 without causing undue difficulties. On the labour side there are some rather serious shortages of some classes of skilled people, but the influx of skilled migrants may help to relieve these. With a rising demand for labour, it ought to be possible to reduce substantially further the number of persons registered as seeking jobs. Meanwhile there will be a good deal of migrant labour coming in and, at the turn of the year, there is likely to be about the same number of young people leaving school to join the work force as in recent years. There is still some unused plant capacity in some industries and. of course, further capacity is being added in other industries. It promises to be a good production year again in rural industry and, while imports are likely to rise as local activity grows, we should have little to worry about on external account if export prices hold at anywhere near their present levels.
At the same time it is also clear that expenditure in most, if not all, of its main branches is likely to increase fairly strongly and so provide a strengthening demand for the products of industry. Business generally is now moving along under the most reliable of all stimuli - an upward trend of profits. As it has been shaped, the Budget should undoubtedly have a strong expansive effect. Broadly, this will come about in two main ways. In the first place, it provides for a very considerable increase in expenditures, direct and indirect, on goods and services - a much greater increase in fact than has occurred in recent years. In the second place, the amount taken back from the community by way of taxes and charges, though larger than last year, will not increase by as much as expenditures. The gap to be financed from borrowings will thus widen.
To illustrate this, the Budget estimates for this year have been set out on the national accounting basis used by the Commonwealth Statistician in the annual White Paper on National Income and Expenditure. They are compared on the same basis with the Budget results for several recent years. The tabulation shows, amongst other things, a progressive widening over recent years of the excess of expenditure over revenues, and hence an increased reliance on borrowings to finance expenditures. Incidentally, it also shows that, contrary to much that has been said, the Budget of last year had, in these terms, a quite strong expansionary influence.
This amounts to saying that we think the Budget will play a full part in promoting an adequate rise in the level of activity through the current financial year. But that is far from being the sole purpose we have sought in framing it. Our object is to keep the economy moving strongly onward without departing from its steady course.
Debate (on motion by Senator Kennelly) adjourned.
Motion (by Senator Henty) - by leave - agreed to -
That leave be given to introduce a bill for an act to amend the law relating to Customs.
Bill presented, and read a first time.
Motion (by Senator Henty) - by leave - agreed to -
That leave be given to introduce a bill for an act to amend the law relating to Excise.
Bill presented, and read a first time.
Senate adjourned at 9.7 p.m.
Cite as: Australia, Senate, Debates, 13 August 1963, viewed 22 October 2017, <http://historichansard.net/senate/1963/19630813_senate_24_s24/>.