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Tuesday, 13 September 1983
Page: 710


Mr McGAURAN(10.14) —It would appear that Australia is slowly beginning to pull out of the recession but that growth in the economy in 1983 will remain slow. The most reliable estimates set Australia's growth rate this year at 0.2 per cent, which is a shade lower than the 0.3 per cent achieved in 1982. The question now is simply whether the 1983 Budget will capitalise on the opportunity to build on that 0.2 per cent growth and lead us to a resurgence. In other words, does this Budget lead us to conclude that a growth rate of, say, 3 or 3.5 per cent can be achieved in 1984? Regrettably, I believe that this Budget will not build on the 1983 growth rate which resulted from the previous Government's policies. The Hawke Government has failed to grasp with open hands the opportunity to lead this country out of its recession. The consequences of continued recession are all too obvious. At the risk of stating the obvious, this Parliament or any parliament must have as its paramount concern the future of our country. Consequently, youth unemployment poses one of the most expensive and heart rending social and economic problems now facing this country. The true awfulness of being poor and young, and young and cynical, is difficult for us to truly imagine. We must not slam the door in these people's faces.

Why then do I believe that this Budget will not lead to economic growth? I believe that the Budget, not to put too fine a point on it, rejects the private sector and also rejects the rural sector. Clearly the Government, through its Budget antipathy to both the private and rural sectors, believes that increased public expenditure will achieve economic growth. That, Mr Deputy Speaker, is a mistaken belief that will cost Australia and its unemployed dearly. It is only through vigorous and profitable-I know the word 'profit' is anathema to members of this socialist Government-growth that Australia will come out of its present recession. Let us first examine the Budget's treatment of the private sector before examining the attacks on the rural industry. The overall expenditure in the Budget increased by a massive 15.8 per cent. One major effect of the Budget' s $8.4 billion deficit will be higher inflation. It is ludicrous for the Treasurer to expect an inflation level of 7.5 per cent in the next year. As he said in his Budget Speech as reported at page 57 of Hansard of 23 August 1983:

The Consumer Price Index could rise by about 7 1/2 cent in year-on-year terms . . .

The Treasurer arrived at that figure only after the effects of the Medicare system were taken into account. On the Government's figuring this will artificially reduce the consumer price index by 3 per cent. Consequently, that means an underlying rate of inflation of at least 10 per cent. Whatever chance there was of achieving single digit inflation was lost as a result of the huge deficit. Inflation will lead to demands for wage increases outside the Government's very frail and already crumbling prices and incomes policy with the Australian Council of Trade Unions. The strain on small businesses in particular will be crippling. Inflation also will not help Australia's trade balance, as its major trading partners have reduced inflation to around 2 per cent or 3 per cent. In Budget paper No. 1, the Treasurer has this to say about our relationship with our trading partners:

At present . . . the Australian economy is not well positioned to improve its share of world trade. In particular, our inflation rate is currently more than twice that of our major trading partners. Prospects for 1983-84 are for no more than some narrowing of that margin.

That is the effect of inflation as a result of the huge deficit caused by this Government. Another effect upon inflation is indexed excise duties. I refer to the indexed increases and excise duty on beer, spirits and cigarettes-3c on a packet of cigarettes, 3c on a bottle of beer and 30c on a bottle of whisky. Prices in future will go up in line with the CPI on 1 August and 1 February of each year. That is simply institutionalised inflation.

Another major effect of the huge deficit will be interest rates. Like it or not , interest rates will not drop by any appreciable margin but will remain at a level which discourages and indeed in most cases prohibits investment in businesses. Continued high interest rates sound the death knell to small businessmen and entrepreneurs. The effects on large companies are all too obvious. As profits are diminished by interest repayments on loans, investments in new projects are curtailed. The bottom line is that unemployment increases. The recent 0.5 per cent decrease in home loan interest rates is due to a drop in American interest rates and capital inflow into Australia. The Budget fails to tackle, let alone diminish, the three major economic problems in this country; that is, inflation, interest rates and unemployment.

The unemployed have every reason to feel betrayed by a government which, on election to office, promised to create 500,000 jobs in three years. The Government knows that to create 500,000 jobs in three years would require a growth rate of at least 5 per cent per annum. The Prime Minister (Mr Hawke), and the Minister for Finance (Mr Dawkins) in particular, have persisted with this cruel myth. Indeed, 'myth' is not the word; it is a cruel hoax. It has to be described for what it is-a hoax. It is shown to be a hoax at page 68 of Budget Paper No. 1 which indicates that unemployment will increase by half a per cent in 1983-84.


Mr Hunt —All their own doing.


Mr McGAURAN —It is all their own doing. Moreover, it is their own figure. However, I fear that this is a very optimistic view of the growth in unemployment in the next financial year. I very much fear that the figure will be significantly larger. That fear is already crystallising. The Australian Bureau of Statistics showed that there was a loss of 52,000 jobs in August; that is, 52,000 fewer jobs were available in August than in July. That is a major effect of this Budget and it will increase, regrettably, in the months to come.

Some political commentators propagate the myth that the economic policies of the Government are not too far removed from those of the Opposition. Perhaps the only factor in the Budget that I and my colleagues can take some comfort from is that this myth has been shown to be utterly false. The Opposition's alternative Budget would have provided relief and incentives for the private sector and would have rejected out of hand increased undisciplined public expenditure. The Opposition believes that economic growth is achieved through the private sector. The Government believes that it is achieved through the public sector. That difference is clear and unequivocal. It will be laid before the Australian people to choose at the end of a year, when the Government Budget of big spending and stimulation of the public sector can be properly judged. Our political philosophy is intertwined with the rights of individual success, individual growth and individual profit. The Budget strikes at the incentives for individuals to work hard and to accumulate savings.

I now turn to the Budget's treatment of the rural sector. It needs to be said that the mini-Budget of 19 May, with its unprecedented savagery, laid the groundwork for the Budget of 23 August. Do the Treasurer and the Minister for Finance have to be told of the importance of the rural industry to this country? Do they have to be told of the importance of the rural industry to our foreign trade? Do they have to be told of the huge number of Australians who rely, either directly or indirectly, on the rural sector for their employment? I suggest that the Government's action in the 19 May mini-Budget and the 23 August Budget leaves not a scintilla of doubt about its discrimination against country people. Whilst total outlays in the Budget for agricultural and pastoral industries will fall by nearly 10 per cent over the previous year, as I mentioned earlier overall Budget expenditure will increase by 15.8 per cent. If this figure is not sufficient proof of the Government's discrimination against country people, any examination of the specific measures against country people is sufficient.

These measures are very easy to list. In the May mini-Budget we had these measures against country people: First, the reduction of general depreciation allowances; second, the removal of the tax incentive from the income equalisation deposit scheme; third, an increase of 2c a litre in the excise on aviation fuel; fourth, abolition of the special depreciation allowance for petrol storage; and fifth, abolition of the automatic in-out opting provisions of the tax averaging scheme. That is probably another matter to which the Minister who is endeavouring to interject might like to give consideration. The problem with the Minister for Finance is that when he is not surrounded by his advisers he has difficulty coming to grips with some of these technical matters. The list continues: Six, cancellation of the bicentennial water resources program-nobody has ever accused the Minister for Finance, who is still endeavouring to interject, of having a great intellect or a pleasant personality ; seven, the decrease, at a cost of $10m in 1983-84, in the subsidy payable under the petroleum products freight subsidy scheme; and, eight, the increase in interest payments on Telecom Australia and Australia Post borrowings, resulting in higher telephone and postal charges. Those are the eight measures.

Let us have a look at the August Budget. Its list of discrimination against country people is as follows: First, increased cost recovery-


Mr Simmons —Tell us what you would have done.


Mr McGAURAN —I have been asked, if I may pause in this litany of discriminatory acts against country people, what I would have done. The honourable member has either just walked into the chamber or, in the typical fashion of Government members, has been sitting here in some sort of stupor. I have said, and said repeatedly, that this Opposition is committed to stimulation and growth of the private sector because by way of stimulation of the private sector economic growth is best achieved, and economic growth will bring jobs. That is probably not a matter of tremendous concern to the honourable member; but, if he mixes and circulates amongst the unemployed, and particularly unemplyed youth, it would be a matter of as much seriousness to him as it is to the members of this side of the House.

The August Budget hits country people through a number of measures, most of which have been documented by my distinguished colleague the honourable member for Darling Downs (Mr McVeigh) as well as my equally distinguished colleague the honourable member of Maranoa (Mr Ian Cameron). The honourable member for Maranoa represents the people of Queensland in a vigorous, distinguished manner. The mini-Budget and the Budget hit hard at the rural sector at a time when it was recovering from the worst drought in Australia's history which resulted in great suffering-suffering which I and my National Party colleagues either witnessed or experienced at first hand. The figures need to be pointed out to this Government . They show that there was a fall in gross farm product of 18 per cent which, measured in real terms, means that farm incomes show the largest percentage decline in the last 30 years. All the Government can do is to take away what little incentives there are and, moreover, unfairly and harshly burden primary producers by its cuts in expenditure.

In conclusion, by its Budget the Government has failed to capitalise on the slight growth rate predicted for 1983-84, and its failure is due to its concentration on public expenditure at the expense of the private sector. The matter is that simple, Mr Speaker, and for Australia it is that tragic.

Debate interrupted.