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Wednesday, 25 September 1974
Page: 1399


Senator WITHERS (Western AustraliaLeader of the Opposition) - I speak to the motion moved by Senator Wriedt last Tuesday night that the Senate take note of the Budget Papers. Before I conclude my speech I will be moving an amendment to that motion. This Budget has been labelled by some commentators as a Robin Hood Budget. I am sure Robin Hood would turn in his grave if he was aware that his name had been attached to the Australian Labor Party's Budget for 1974. This document that we are discussing is not a plan for taking money from the rich and giving it to the poor. It is a document which envisages fleecing both the rich and the poor to enhance this Labor Government's treasury coffers. The rich will probably be able to weather the assault, but for the poor and the industrious middle income earners the outcome will be very different. It will make a mockery of their savings and erect an almost impenetrable barrier between them and their hard earned comfort and independence.

This 1974 Labor Government Budget is a double-dealing, dishonest, thoroughly disreputable document which, far from trying to face and overcome the two major problems of inflation and unemployment, uses an inflation rate of 20 per cent on which to base its program and dismisses the problems of unemployment by announcing that the unemployed will be used on useful community projects. The Government is deliberately feeding inflation because its Budget depends on it. Without a high inflation rate the Government would not be able to finance its expansive and expensive programs. This Government is prepared to bring the country to its knees merely so it can boast that in 1974 it started this program or that scheme. It does not give a jot for the welfare of the people. Its only concern is how its first Prime Minister in 23 years will be reported in the history books.

Just over 12 months ago this Government brought in its first Budget for 23 years. It was a Budget which precipitated this country's present financial problems, which set the scene for spiralling inflation and sowed the now rapidly growing seeds of unemployment. This, the Government's second Budget, ensures that we cannot easily get out of the Labor created financial mire. Tragically, this Budget follows policies that have depressed Australia's economic confidence, increased inflation and stimulated unemployment. It presents the private sector, of which it is so scornful, with a bill for a vast 32.4 per cent increase in government spending. It expects this tremendous increase in government spending to be financed by a depressed private sector base in which, according to the Treasurer (Mr Crean), there will be little or no productivity increase in the coming year, along with an unemployment level rising at a faster rate than the normal growth of the work force.

This Budget is not a calculation of our economic course in the coming fiscal year, carrying with it a reasoned program based on that calculation. It is a statement of political socialist action which has proudly harnessed inflation itself and which hopes that unemployment will go away if it keeps its head in the sand long enough. The Treasurer has based his Budget on the assumption that inflation can be expected to continue at 20 per cent or a fraction over, that incomes will rise by 22.5 per cent in the year, and gross nonfarm domestic product by around 2 per cent. To base a Budget such as the 1974 Budget on these forecasts is frightening enough, but when one considers how inaccurate Mr Crean 's forecasts have been in the past it is quite horrifying. A similar calculation in Mr Crean 's 1973 Budget assumed an inflation rate of 10 per cent, but this turned out to be closer to 15 per cent. On this basis the fear of inflation rising to 25 per cent or even more is not beyond the realms of possibility. Mr Crean also underestimated wage rises for 1973-74. With this history of underestimating such important factors it is very difficult to summon any confidence in other estimates and predictions in this Dr Jekyl and My Hyde Budget. I think that is its name, though I thought it might have been Dr Cairns and Mr Crean. However I prefer the literary allusion.

It is equally difficult to believe that Mr Crean 's attempt to buy wage restraint from the unions with a few illusory and dishonest so-called tax cuts will be successful. These tax cuts, so the Government would have us and the unions believe, are a major aspect of this Budget. They will, the Government hopes, buy it out of trouble. In fact these tax cuts are a figment of Labor's distorted imaginings. They are based on a fraud. On Mr Crean 's own estimates of the increase in earnings, average wage earners will be paying more in tax than before the Treasurer so righteously reduced taxation. Yet he then has the gall to say that his tax cuts will dampen the roaring demand for higher wages. On one hand he announces moves he claims will dampen claims for wage increases and appeals for wage restraint, while on the other hand he frames a Budget which assumes a 22.5 per cent wage hike. So much for restraint.

It is quite obvious from this Budget that the Government believes that all sectors, excepting the Federal Government, should exercise restraint in all areas of activity. The Federal Government has called on the union for restraint, on the private business sector for restraint, and on the State Premiers and their Governments for restraint; but what has it done in this Budget? It, the Federal Labor Government, has thrown restraint to the 4 winds; it has decided on one last great and glorious spend-up. It is going to go on an inflation spending spree. And while it is out spending its inflationary gains and storing up disaster for the national economy, it moralises to the fictional man earning $70 a week, who has a non-working wife and 2 dependent children, that he will no longer have to pay any tax. A search for this typical worker proved him to be atypical. According to union and employer spokesmen he would have to be under 1 7 years of age, an invalid pensioner, have a job not covered by any award in Australia or work only part time. As one spokesman is reported as saying, if he has a wife and 2 children at 16, he has enough to worry about without tax as well. However, let us take a worker who does exist and let us examine how the Government's much heralded tax cuts for low income earners will enable personal income tax collection to jump by 46 per cent. At present a man earning $100 a week pays about $ 1 7.35 a week in tax. Under the new scale his tax will fall to $16.15 or 16.2 per cent of his wage. However, if wages rise as the Treasurer expects they will, this same man will be earning $ 120 a week by the end of this financial year. His new tax will be $22.65 a week or 18.9 per cent of his income. So the typical man will see the percentage of his wages going in tax rising from 1 7.35 per cent to 1 8.9 per cent.

That is a simple illustration of how phoney are these so-called tax cuts. Although the Government has granted this man lower taxes, by the end of the financial year he will be paying onesixth of his income in taxation. Will this man believe that the Government's actions oblige him to exercise wage restraint? Will the Government's action in imposing a tax on property income, thus reducing the income to be earned from rent, encourage home owners to show restraint when deciding on rental figures? The only area in which restraint can be assured is in investments for the imposition of a capital gains tax which will further reduce the attractiveness of any investment proposal. This is the only measure in the Budget that will achieve restraint, but it will achieve restraint in an area which does not need it. The economic welfare of Australia depends on the health and vitality of the private sector, yet it is this sector which the Government is so determined to undermine and weaken. Having partly succeeded in this project by ensuring business pessimism and a decrease in investment, the Treasurer proclaims proudly:

The expansion in the public sector contained in this Budget is designed to take up the slack emerging in the private sector.

The Government has done all it can to manufacture this slack and is now expecting accolades for taking it up. In its 'soak the rich to pay for the poor' dogma which the Australian Labor Party is still hoping will win it back some of the union support it has lost during its 21 months of government, the Government is returning to the premises of the 1 930s. The Party which forms the Government has failed to move with the times. It has failed to realise that the majority of Australian investors are ' small ' investors.

The books of finance companies alone list up to one million individual holders of debentures and unsecured notes, most of them holding only a few hundred or a few thousand dollars worth. Does the ALP claim that there are one million rich people in this country? The ALP also overlooks the fact that the majority of investors in Australian companies are people with only a few hundred shares- people who are in great need of income, who have bought shares purely because they have offered high dividend yields. The Government has failed to admit that there is a calculated risk in any investment. Even government bonds have declined in capital value by up to 40 per cent in 'government guaranteed' investments over the past few years. There is no way for most people to claim losses as a tax deduction if their investment fails. They not only have this risk to worry about but a penalty tax as well. The Government's attack on so-called 'unearned income' will hit many more rank and file union members than wealthy capitalists. It will adversely affect many more pensioners and elderly people on fixed incomes who have saved their earned income during their working life to ensure for themselves a reasonable standard of living during retirement. It will affect them more than it will adversely affect the industrial barons and capitalists in our community.

Now let us take a look at the Budget proposals on estate duty. Mr Crean announced that 'along lines indicated in the Policy Speech' interest up to $35,000 in a principal matrimonial home that passes to a surviving spouse will be excluded from the value of the estate. That appears to be a noble gesture. But what Mr Crean failed to spell out is that, on death, assets will be deemed to have been realised before death so that capital gains tax will be added to estate duties. The capital gains tax will be paid not by the surviving spouse, according to Mr Crean, but by the person who is deemed to have died. It will not make much difference to the widow, struggling to make ends meet, who is deemed responsible for the payment of the capital gains tax because, no matter how one looks at it, she will be minus that amount of money. Is this the way the Government looks after women's interests? Surely it is not to sanction this sort of action that this Government has appointed a special adviser on women's affairs, or does this Government believe that by donating $2m to International Women's Year it will silence vocal women's organisations? I do not think that it will.

Let us take a look at another one of the Budget's so-called 'soak the rich' provisions- the reduction in the educational tax allowance from $400 to $150. The Labor Party may believe that the decision to reduce the taxable education allowance struck a blow at privilege, but the decision hit not only private schooling which the Party hates so much; it also affected the parents of all children who have to wear school uniforms. This Government- the champion of free educationis making it difficult for children to dress decently while they are learning. This Government is so devoted to its cloth capped bare footed boyhood that it wants all children to experience the same type of childhood. The Government's claim that the average cost of fitting out a school child is $120, like Mr Crean 's worker on $70 a week with 3 dependants, defies ordinary imagination. It is quite obvious that Mr Crean has not shopped around for school clothes for an awfully long time.

The cost of fitting out a high school student attending a state high school in New South Wales with a basic summer and winter uniform is, to the nearest dollar, $1 13 for a girl and $173 for a boy. Add to this two extra shirts or blouses, a second summer tunic for a girl, an additional pair of shoes, some extra socks and sports uniforms, and the total goes up to about $191 for a girl and $265 for a boy. Even under our free schools system there are still school fees to cover text books, school materials and other items which vary considerably from school to school. There are school excursions and there are contributions to the parents and citizens associations. I believe that the average parent with a child at a state school would be very lucky to keep his costs for educating his child below a grand total of $30 1 for a girl and $375 for a boy.

What will the Government give them- a $150 deduction. So by its intended attack on the minority of parents with children at private schools this Government has slugged the majority of parents with children at state schools. This Government is making it more and more difficult to keep children at school for their full secondary education. It is making it more and more difficult for students to take advantage of the improvements in education being made possible by the Govenment's massive injection of funds into education. What is the use of having wonderful new schools, with the latest equipment and a teacher for every 5 pupils if the pupils are not able to continue with their education because of financial problems on the domestic scene?

Another about-face embedded in the Budget concerns the Public Service. The Government has now seen fit to limit the growth of the Federal Public Service full-time staff to a growth of 2.6 per cent in 1974-75. We all remember what the Prime Minister said in May of this year of the Liberal Party's intention to limit the growth of the Public Service to 3 per cent. The Prime Minister said then:

Yet for the sake of paltry short-term savings, as the price of losing the time and talent of men and women who have agreed to serve their country, judges, academics, State public servants and businessmen our opponents propose to throttle these new activities; they intend to cut off the source of expert and public advice so essential to any planning for the effective, efficient, most humane and least expensive ways of dealing with Australia's accumulated social and economic problems for the rest of this century.

Apparently, Mr Whitlam has now decided to let the 'rest of this century' look after itself and deal with the Public Service situation now. He has decided himself, apparently, to 'throttle' new activities and 'cut off the source of expert and public advice'. Now the Prime Minister has decided himself to make those 'paltry short-term savings ', something he said that we would do.

The Budget also provides for some short-term savings with long-term consequences in the area of defence. We all know the slight regard the Australian Labor Party has for our defence forces. So it was not really a great surprise to find that the smallest increase among the Federal Government's major commitments went to defence. Although defence expenditure will increase by $ 164.6m, the total allocation is somewhat less than 2.5 per cent in real terms of the gross domestic product and well below the 3.2 to 3.5 per cent of gross national product promised by Mr Whitlam in 1972.

What are some of the other double deals of which this Government is guilty?

Of course there is the onagainoffagainonagain child care program. According to the Budget it is on again. This time the full scale program is to be financed during the first year with an amount of $75m. Originally in the May policy speech, that is before it was off-again in the minibudget, the child care program was to cost $130m in the first year. Of course, that May policy speech provides a wonderful source of contradictions and impossible boasts. It is almost unfair to keep on repeating them, but I cannot resist. Do honourable senators remember Mr Whitlam on inflation? He said:

And these policies are beginning to work- inflation has slowed . . .

Not according to the September Budget. Do honourable senators remember the boast on tariffs:

Administratively we cut tariffs by 25 per cent to reduce the price of imports without damaging Australian industries.

Now Mr Whitlam, his Cabinet, his Caucus and his union supporters are in a bitter in-fight on this matter over who is lying about what.

Then we had the position in relation to the Australian dollar. Mr Whitlam said:

We have twice revalued the Australian dollar reflecting its true status as one of the world 's strongest currencies.

Today some 4 months later, Mr Whitlam has devalued that currency by 12 per cent. Further on in his famous speech Mr Whitlam, to the applause of his minions boasted:

We promised to restore full employment. We have restored it.

How does Mr Whitlam feel today? His deliberate credit squeeze has created unemployment. It has created the words unemployment in the decade. Some measure of Mr Whitlam 's feelings on the issue can be gauged by the fact that he is leaving the country on Friday to get away from his real problems for a while in order to assume the mantle of the world leader and elder statesman. He is going to let the mess at home muddle on without him.

I pose this thought and suggestion: Perhaps Mr Whitlam, who is serious and avid student of history should delve into the historical knowledge to recall what happened to President Nkrumah and Prime Minister Obote during their trips overseas. Whilst treading the stage of international politics, these 2 leaders lost their governments to their deputies. If Mr Whitlam is not concerned or interested in the plight of his country, one would think he was at least interested in his preservation. I ask him: Is your journey really necessary?

Do honourable senators remember Mr Whitlam 's comments in May on leadership? I am sure we will all remember them. Talking about difficult decisions Mr Whitlam propounded:

Such decisions can be taken only by a united government, a united leadership, a united party, a united nation. And our government alone offers such unity, such leadership.

I wonder does anyone in the Labor Party really believe that statement today as its top echelon publicly squabbles over who has lied and about what. Is that the united leadership, the united government, the united party Mr Whitlam was talking about? Mr Whitlam cannot even agree with the Budget papers. He claims the Budget will 'stimulate employment opportunities and reverse the unemployment trend'. Interestingly enough, those who have the courage and time to read the Budget papers will have noted that statement No. 2 which is attached to the Budget and which deals with the economic context of the Budget says in part:

Over much of the year aggregate demand is expected to be relatively weak and the level of unemployment is expected to increase.

I repeat that statement No. 2 attached to the Budget states:

The level of unemployment is expected to increase.

This Budget, which is based on inflation, which forecasts expected unemployment, the taxation reforms in which are nothing but political fraud deserves condemnation. How a Government can act so irresponsibly after the 'new deals' it promised Australians only 4 months ago is inconceivable. The central crisis for Australia today is not with schools, new trains or urban development. The crisis for Australia today is with rising inflation and rising unemployment. On these problems the Budget is at best almost irrelevant, at the worst, if its gamble to woo the unions with its phoney concessions fails, it could be a national disaster. I move:

Leave out all words after 'That 'and insert 'the Senate is of the opinion that the Budget fails to tackle Australia's economic crisis, in that:

(a)   Unemployment is permitted to grow and the prospect for school leavers is prejudiced;

(b)   Inflation is accelerated;

(c)   existing poverty is ignored and new poverty is created;

(d)   Personal income tax is increased 45 percent;

(e)   Living standards will be lowered;

(   f) Private enterprise is stifled;

(g)   Government power is further centralised;

(h)   Individual incentive and thrift is penalised;

(i)   A double tax is levied on estates.

And because the Government:

(i)   Has made the Budget a socialist vehicle to intensify the attack on the States and break down the free enterprise system.

(ii)   Believes the absurdity that the Government can spend without people paying or can build without people producing.

(iii)   Has preached private restraint but has threatened its achievement by its own Government extravagance.

I commend the amendment to the Senate.







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