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Wednesday, 1 December 1976


Mr Hurford asked the Treasurer, upon notice:

(   1 ) In view of the deficit on the first 3 month's financial transactions by the Government of $2,276m compared with the budgeted deficit of $2,608m, what is the level of the deficit now expected for 1 976-77.

(2)   If there is any change in the expected deficit, what factors are influencing this revision.


Mr Lynch - The answer to the honourable member's question is as follows:

(   1 ) The honourable member should be aware that it is not possible to reach firm conclusions about the likely deficit for the year as a whole on the basis of figures for the first few months only. At the very least it is important to look at the movements in outlays and receipts and to take account of any special factors bearing upon those movements.

Figures are now available for the first four months of 1976-77 and show a deficit of $2,859m, compared with the budgeted estimate for the year of $2,608m. However, an examination of the figures shows that outlays in the four months to October were 10.6 per cent higher than in the corresponding months a year earner, this rate of increase is marginally below the Budget estimate of an increase of 1 1.3 per cent for the year as a whole. Movements in outlays throughout the year are affected by the incidence of pay-days and other 'lumpy' transactions, but movements to date are broadly in line with the Budget estimate.

It is the slow rate of growth of receipts- relative to the Budget estimate- which is responsible for the large deficit to date; total receipts in the four months to October were 1 1.0 per cent higher than in the corresponding months a year earlier, which compares with the Budget estimate of an increase of 18.8 per cent for the year as a whole. The relatively low increase in the most recent period, however, was largely a reflection of the fact that there was no quarterly collection of company tax in the first four months of this year.

Because of the marked seasonal pattern in collections of tax from companies and non-PAYE individuals, further sizeable monthly deficits can be expected before the accounts swing into surplus next March or April.

(2   ) The Budget estimates are subject to many assumptions and influences and it is inevitable that a number of revisions -in both directions-will be called for as the year progresses. At this time, however, there is no reason to believe that the outcome for the deficit will be substantially different from the Budget estimate of $2,608m.

Investment Allowance: Effect on Employment (Question No. 1412)


Mr Hurford asked the Treasurer, upon notice:

(1)   Has his Department made any attempt to study the effect of the investment allowance on employment creation.

(2)   If not, does the Department plan to conduct or commission research on this issue.


Mr Lynch - The answer to the honourable member's question is as follows:

(   1 ) Initially the effects on employment arise from the construction and operation of additional plant. In general, the investment allowance increases the return to the investor from the plant and makes it more likely that he would undertake the investment. The resultant higher level of investment activity does, of course, contribute to the process of economic recovery.

As to quantifying the employment effects of the investment allowance, the honourable member would know that it is not possible to differentiate in practice between the employment-creating effects of each of the many influences affecting employment in a dynamic economy. It is clear from the foregoing, however, that the allowance has both an initial and a continuing impact on employment.

(2)   The Treasury will continue to keep all aspects of the operation and effectiveness of the allowance under review. There are no plans to commission research on this issue.







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