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Thursday, 10 September 1936

Senator Sir GEORGE PEARCE (Western Australia) (.Minister for External Affairs) [5.2]. - I lay on the table -

Estimates of receipts and expenditure, and estimates of expenditure for additions, new works, buildings &c, for the year ending the 30th June, 1037.

The budget, 1036-37 - Papers presented by the Honorable K. G. Casey, D.S.O. M.P., on the occasion of the budget of 1936-37, and move -

That the papers be printed.

It has been the practice in the Senate on the day on which the budget is presented in the House of Representatives to submit this motion, and to make a short statement embracing the main features of the budget, so that honorable senators may have an opportunity to discuss the Government's financial proposals simultaneously with the budget debate in the House of Representatives. That is a valuable procedure to adopt, although, of course, the bills to give effect to the main financial proposals embodied in the budget will later come before the Senate for its approval. Most of these are money bills which will have to be introduced in the House of Representatives, and will not come before this chamber until later in the session.

The Treasurer (Mr. Casey) presented the budget for 1936-37 in the House of Representatives this afternoon. In remarking on the continued improvement of the situation in Australia during the last twelve months, the Treasurer expressed the pleasure of the Government in being able to improve further the position of every section of the community. While not pretending that the Government can justly claim credit for all the improvement of which the budget is a convincing demonstration, because many factors which affect the prosperity of a community are quite beyond the control of governments, he claimed, on behalf of the Ministry, that its policy has had a very great influence in bringing about the desirable results reflected in his financial statement.

In 1935-36, revenue amounted to £82,203,341 and expenditure to £78,635,621, the excess of receipts over expenditure being £3,568,000. The principal increases of revenue were -


In the Postmaster-General's Department, the revenue exceeded the estimate by £165,000, while the expenditure was £22,000 below the estimate, a net improvement of £187,000.

Increases of expenditure over the estimate were, apart from small variations, as follows :- Federal aic! roads, £279,000 - which was offset by increased revenue from the petrol tax - and relief to primary producers, £1,275,000.

Of the total expenditure of £78,635,000, major services of an inescapable nature absorbed £55,237,000, the gross cost of administration of business undertakings and territories was £16,311,000, wheat relief and like payments to primary producers cost £2,450,000, and all other federal expenditure, including administration of all ordinary departments, cost of Parliament, &c, amounted to £4,637,000.

Conversions of Commonwealth loans in London since October, 1932, now amount to £198,513,000, and the average rate on the loans dealt with has decreased from £5 Os. lid. per cent, to an average of £3 10s. 2d. per cent. The conversions of London indebtedness carried out with such success by the High Commissioner, during the last four years have resulted in a saving in respect of interest and exchange of approximately £4,000,000 per annum, of which £850,000 accrues to the Commonwealth and £3,150,000 to the States.

Since the national debt conversion in July, 1931, eight new loans have been floated in Australia amounting to £S3,546,000, of which £9,429,000 was for the Commonwealth and £74,117,000 for the States. On the average of the last four financial years, the Commonwealth has not claimed the 20 per cent, of loan moneys to which it is entitled under the Financial Agreement. The average taken has been 11.3 per cent. The policy of the Commonwealth has been to keep its loan requirements to a minimum in order to allow State governments as free access as is possible to the loan market.

For the year 1936-37, the Government once more presents a balanced budget.

From the time that it became apparent there would be a substantial excess of receipts over expenditure in the Commonwealth accounts for 1935-36, the Government has not been without requests and advice from various sections of the public on the subject of its future financial policy. The Government has given consideration to all the proposals, and has endeavoured to do what it considered would be the most likely to benefit Australia as a whole.

Notwithstanding the increased sum of £1,336,000 required from revenue for the development of defence and the growing cost of old-age pensions, the budget provides for remission of taxes to the amount of £5,275,000 in a full year and for other new expenditure proposals costing £1,220,000 in a full year. In the present year these revenue remissions will cost £3,868,000 while the expenditure proposals, including defence, will cost £2,311,000. The total cost of the revenue remissions and expenditure proposals in the present budget is £6,179,000.

It is proposed to reduce sales tax from 5 per cent, to 4 per cent., involving a loss of £2,000,000 per annum, while further exemptions to an annual value of £1,000,000 will be provided for.

Certain remissions of primage duty are proposed, amounting to £128,000 in. the current year.

In regard to income taxation the Government proposes to abolish the special property tax of 5 per cent. In 1930-31 the rate of this special tax wai 10 per cent. In 1933-34 it was reduced to 6 per cent, and last year to 5 per cent. The cost of abolishing this special tax will be £1,300,000 for a full year. In addition, the Government proposes to reduce the rates of normal income tax on individuals by 10 per cent, in respect of both income from personal exertion and income from property. This will cost £435,000 for a full year.

The proposals for the remission of taxes may be summarized as follows: -


The third annual report of the Commonwealth Grants Commission, which is being tabled to-day, contains recommendations for payments to certain States in 1936-37. The following is a comparison of the amounts recommended for this year, with the sums paid in 1935-36: -


The total amount to be paid this year will be £320,000 less than the amount paid last year, although it will still be in excess of the 1934-35 grant. The Government proposes to seek parliamentary approval for these grants.

The present federal aid roads agreement between the Commonwealth and the States, which will expire on the 31st December next, will be renewed for six months, and proposals will be submitted to Parliament for new agreements with the States to cover a further period of ten years from the 1st July, 1937. It is proposed that these new agreements shall provide, on existing terms and conditions, for payment to the States of 3d. a gallon on petrol imported and 2d. a gallon on excise petrol, that is, an increase of £d. a gallon in each case over the present rates. In addition, a further $d. a gallon of customs .and excise duties will be made available for the sama period for the purposes of roads, works, or forestry.

At the 30th June, 1936, there were 287,235 invalid and old-age pensions in force, an increase of 13,257 during the twelve months. The total expenditure in 1935-36 amounted to approximately £12,800,000, which is the highest amount expended in any one year since the inception of the scheme in 1909. It is proposed to increase the present maximum rate of 18s. a week to 19s. a week, at an estimated annual cost of £760,000. The estimated total expenditure for the present financial year on invalid and old-age pensions is £13,980,000.

In regard to maternity allowances, it is intended to liberalize the law by providing for payment of an allowance of £4 10s. for the first child and £5 in every case in which there is any previous surviving issue under the age of fourteen years. The present scale is £4 for tha first child to those with an income not exceeding £208 per annum, the payments increasing according to the number of surviving children under fourteen years of age, up to a maximum payment of £5. The Government proposes to increase tha amount of allowable income from £208 to £221 in cases where there is no previous surviving issue, and to allow a corresponding increase throughout the existing income scale with a maximum income of £312 per annum.

The Government has decided to increase the rate of service pensions for certain classes of ex-members of the Australian Imperial Force by ls. a week, to increase by ls. 6d. a week the pensions to children of incapacitated soldiers and to make several other minor concessions to remove anomalies in the existing legislation. The estimated annual cost of these additional concessions is £162,000.

In 1931, the salaries of Commonwealth employees were subjected, by the Financial Emergency Act, to reductions, as part of the plan for the rehabilitation of Government finances. In view of the general improvement of Commonwealth finances, it is now proposed completely to restore the salaries of all Commonwealth employees to the normal rates. "Where the salaries of. employees are, under ordinary legislation, subject to automatic adjustment in accordance with cost of living variations, such adjustments will continue to operate. The present cost of living reductions, as compared with the 1930 standard, total approximately £1,300,000 per annum, and will, as stated, continue to operate. The cost of this restoration in respect of the Public Service and other Commonwealth employees will be £97,000 for a full year, and £74,000 for the current year.

In respect of allowances to members of Parliament and salaries of Ministers, a partial restoration will be made, equal to 10 per cent, of the normal rate. The reductions then operating will be -


The cost of this partial restoration will he £10,000 for the current year, and £13,000 for the full year.

The trend of recent international events has emphasized the importance of national defence, and the Commonwealth has no alternative, in the present state of the world, but to review our defences and provide necessary safeguards. The defence vote this year will be the highest in the history of the Commonwealth; but it is essential constantly to bear in mind that the burden entailed by preparedness is small in comparison with the human and monetary cost of war. The Government is making provision in this financial year, not only for the amount required for the final stage of the three-year programme, but also for £1,480,000 for the commencement of a new programme.

The increasing provision for defence in recent years is shown in the following table : -


The Government has decided to grant an export bounty of 2s. a case of oranges shipped to countries other than New Zealand during the 1936 season. The cost is estimated at £4,500. An additional £80,000 will alsobe provided in 1936-37 to assist growers of apples and pears.

The cost of the principal new expenditure proposals in 1956-37 may be summarized as follows: -


The total proposed expenditure for works 1936-37 is £5,346,000, of which £4,176,000 will be provided from revenue and £1,170,000 from loan. This represents an increase of £1,306,000 over last year. In addition, £2,338,000 will be provided for assistance to the States for unemployment relief works, farmers' debt adjustment, &c.

The estimated budget results for 1936-37 may be summarized as follows : -


Debate (on motion by Senator COL- lings) adjourned.

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