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Tuesday, 20 September 1983
Page: 1023

Mr NEWMAN(9.40) —Any comment on this year's Budget must begin by acknowledging and, I suppose, even admiring the skill of the Prime Minister (Mr Hawke) in the work that was put into the Budget, particularly in selling it as a bill of goods to the Australian public. I suppose the admiration of us all must increase when it is realised that this bill of goods is of very dubious quality- a fact that has gradually been exposed by an increasing number of respected commentators, a great number of industrial and commercial organisations and, in recent days, major banking organisations.

Mr Aldred —And the stock market.

Mr NEWMAN —The stock market too, of course, as my colleague the honourable member for Bruce remarks. The fact is that before the Budget was announced we were well conditioned-that included a gullible Press-to expect a very tough Budget reflecting strong Government fiscal responsibility. In reality, of course , it was a soft Budget, revealing weak Government fiscal responsibility. Despite some of the popular conceptions of this Budget-I suppose they have been backed up in recent weeks by the continued optimistic speeches and comments of the Prime Minister and his Ministers-the fact is that unfortunately in the months ahead this could prove to be a very unfortunate Budget for the Australian economy.

If I could say what I believe are the major weaknesses of the Budget, I would summarise them as follows. First of all, there has been a very large increase in Government spending. Four point seven per cent of gross domestic product is now devoted to the Government deficit. That figure is up 7.2 per cent in real terms. That reflects, of course, a mammoth deficit of $8.4 billion. It is remarkable really that if somebody had said to the country a couple of years ago that we would be facing an $8.4 billion deficit and would have that applauded, it would have been unbelievable. To come to a second point, despite the falling interest rates which we are now observing, I believe that there is a bleak prospect for sustained reduction in interest rates. Indeed, as we move into next year I think that there will be every prospect of increased rates as the Government battles to fund that very large deficit. Of course that situation will be made much worse by the competition there will be between State and semi-government authorities to satisfy their borrowing appetites. I do not think we should forget the amounts of money which the Government has allowed those State and semi-government groups to borrow as a result of the Premiers Conference and the Loan Council.

A third point is that because of the structural arrangements in the Budget and because of the sheer political pressures that the members of the Government will have to face, the Government is locked into future high spending programs and higher and higher deficits. The fourth point is that there is no prospect for reduced unemployment. I think we are now all aware that the Budget predicts a half per cent increase in unemployment; that is an average of 140,000 extra men and women and boys and girls over the year compared with 1982-83.

Mr Goodluck —Hawke should resign.

Mr NEWMAN —As my colleague the honourable member for Franklin says, given the promises of this Prime Minister that the Government would be creating 500,000 extra jobs in its term of government, the Prime Minister should resign. I might just add in passing that the job creation schemes, for which I suppose the Government has to be given some credit in trying to reduce the unemployment figure, are bogged down in administrative detail and qualifications. As I speak to the local government councils in my own electorate of Bass, I find that many of them are simply ignoring the schemes because of the high administrative costs , qualifications and conditions that are imposed on the schemes. I think it would have been much better, if the Government had to look for incentives to create employment, if it had gone to the private sector to do it. Another point is that inflation is set to remain somewhere between 8 and 9 per cent. I do not believe that the 7 to 7.5 per cent figure given in the Budget is realistic. Of course, some commentators are predicting that it will exceed this bracket of 8 and 9 per cent. But of course, taking out the Medicare levy of 1 per cent, the real disguised underlying inflation rate is somewhere between 10 and 12 per cent . So whatever the outcome, we are guaranteed to remain severely uncompetitive in international markets. That has to be bad news for our exporting industries.

Finally, there is the high risk of the whole plan. It is now widely acknowledged that despite all the other weaknesses which I have just outlined, the strategy of the Budget will stand or fall on the success or otherwise of the wages accord. If ever we want proof of that statement we have only to see the Ministers going out to threaten and cajole the unions that the accord simply has to be kept. That is a sure sign of their worrying concern over the whole fragility of the arrangement. The truth is that the recovery, which is apparent in some sectors-we have heard the Minister for Housing and Construction (Mr Hurford) today trumpeting the success of the housing policy-is extremely vulnerable. It will be halted if labour and other cost pressures increase. If the accord fails that recovery will be destroyed and the trend will be reversed.

I have just tried to highlight some of the major weaknesses of the Budget. I would now like to turn to one group in our community which I think has been neglected in the Government's strategy; that is, the young family that is earning around about average weekly earnings. This group has been constantly mentioned by Government members in debates over the last few weeks. In fact, the Prime Minister harangued us in Question Time in one of his typical efforts about the family. Some honourable members-the honourable member for Maribyrnong (Mr Griffiths) certainly is one-have claimed that every decision that this Government has taken since 5 March has decidedly promoted the position of the average family. I hope that I will be able to demonstrate that that is demonstrably false. I thought I would take a typical family in my electorate in the city of Launceston that is earning somewhat below average weekly earnings--

Mr Holding —Tasmanians like him. They think he is terrific. They line up to kiss him.

Mr NEWMAN —If the Minister for Aboriginal Affairs would stop interjecting for a moment and just listen he might be able to learn a few things.

Mr Holding —I am not interjecting. I am talking to your mate.

Mr NEWMAN —I thought he was interjecting. Let me take this Launceston family. It is a young family which has only been married two years. They have two children. One child is 18 months old, and one is seven months. The wife will be 20 years old in January. The husband will be 23 in December. The husband is a fitter and turner who has just recently completed his apprenticeship. He has been employed in a well known Launceston company now for about seven years. I will not mention which company for obvious reasons. They own a home, the value of which is about $26,000. The land is worth $5,000. They live in a very modest suburb in Launceston. The situation of this young family is as follows: They earn $314.25 a week. With their family allowance for their two children, which is $55.35 a month-that is about $13.80 a week-their total income is $328.05.

This is how they budget. This budget was given to me by the young wife. First of all, to cope with the mortgage on their property, to pay for their car which is on hire purchase-it is an old model station wagon-and to rent a television they pay $94.45. To cope with their clothes, food, petrol, meat and the wood fuel they use they spend another $86. I might say that of that total bill, their food and meat bill comes to $48 of which $14 pays for milk. I do not know whether many families of honourable members in this House would see their wives budgeting on that small amount of money. Anyway, those items of clothes, food, petrol, meat and wood come to $86. To cope with their personal insurance, medical insurance, dues to the union and their social club at their factory, they pay $34.73. They pay tax of $70.22, although if the young man had claimed his dependent spouse rebate and so on that tax bill would have been reduced to about $60. So he will get a rebate at the end of the year. That is one qualification of the figures I am giving. He pays rates at $10 a week or $524 a year. Home insurance, home contents insurance, car registration and so on also, of course have to be paid for. The net result of all that is that he has outgoings of $301.40.

I think that all honourable members, being very good mathematicians, will immediately realise that he has a balance there of $26.65. That figure does not include items such as budgeting for holidays, entertainment, car maintenance, provision for electricity bill, the dentist, reserves for emergency, savings, chemist, telephone, or home maintenance. This family also has debts: An electrician, $200; a builder, $800-odd; and a dentist, $100.

Mr Goodluck —Gosh, they are battling.

Mr NEWMAN —As the honourable member for Franklin interjects, this young couple are battling. They are a decent, hard-working young couple. The budget that I have given is one that that family has worked out to try to survive on. I think that everyone can see that this family is very hard pressed. In fact, even taking into account the small tax cheque that they will get at the end of the year, they will find it very difficult to make ends meet, despite a very modest and properly budgeted lifestyle. This is the family about which honourable members on both sides of the House are claiming to be concerned. In making these comments I am not trying to excuse the previous Government either, because I do not think that it did very much for this family, but I do not think that the present Government is helping very much. In fact, it is probably making life a little more difficult for this family.

Let us see how these people will come out of the Budget. First, they will face higher municipal rates. They will face higher utility rates from the Hydro- Electricity Commission, and for telephone and postage. They will face the end of the health rebate, which has gone until February next year. Whatever the Government may say, if this young family wishes to insure for private hospital cover, they will probably end up paying exactly the same as they are now paying in medical insurance. That is about $3 through the rebate and about $7 to cope with their private hospital cover. That is $10, or about what they are paying now. There have been increases in the price of petrol and of cigarettes and, through sales tax, in the price of cosmetics, toiletries and insecticides. The mortgage interest rebate, from which they got some relief, has now gone. There is no indexation of the tax threshold, so this young man's tax will increase as every year goes by. All in all, they will be at least $15 worse off because of this Budget. So much for the Government's claim that it is looking after young families.

There is another inequity in this family's situation which I should also like to mention, because it was referred to by the young wife who brought this matter to me. They compared their situation with that of a friend whom she knows very well. This is a case of an unmarried mother, aged 21, who has a child aged two. For the first year she had that child she lived with her parents. She now lives in a de facto relationship with the father, who is a fourth year apprentice. This de facto relationship has not been declared, so their budget works out as follows: First, as a supporting mother she receives a supporting parent's benefit of $82.35. She gets a guardian's allowance of $8, a child allowance of $ 10, a rent supplement of $10, and a family allowance of, say $5.50. They are up to about $116 a week and that does not include the fact that they get a fringe benefit which entitles them to some special chemist's rates; they do not have to pay for their telephone rental, and honourable members will know the rest of the benefits they get through the fringe benefits. The father earns $224 as a fourth year apprentice, and no overtime is included. So their total income is $340 a week. They pay no rates, as I have said, the mother receives all the fringe benefits. They rent a flat so they do not have to worry about maintenance. They do not have to pay rates. The situation is that, although allowing some basic expenses, except for the cost of buying and running their own house, plus their taxation and the fringe benefit advantages, they end up with a surplus of almost $85 a wek. Let me just go back over that again.

Mr Gayler —Please do.

Mr NEWMAN —I am talking about a young struggling family that gets $328.05, out of which they manage to get $26.65, and I have explained how that really amounts to nothing because of other commitments, and another young couple who live in an undeclared de facto relationship who are almost $85 better off. Some honourable members on the Government benches find that rather amusing. I do not find it amusing, nor do other members of the Opposition. It is a dilemma that faces all of us here. Again I say that I do not believe that the Government is responsible for that position by itself. When we were in government we helped to promote the situation. The fact is that we are creating, through our social welfare system, a special class of welfare cheats. In this case, to put it more crudely, we are providing incentives for people to remain outside marriage and we are asking those in marriage to pay for them.

This young family, as I have said, is hard working and responsible. It represents the backbone of a stable and industrious community. Yet it is families such as this who are helping to create the wealth of the community, on which we rely to pay the taxes to finance the Government's programs. I am not suggesting that we should reduce help for those in genuine need, such as those who really deserve the single supporting parent's relief, but I do not believe that any of us here want to see the taxpayer being asked to support cases such as that I have cited. We must find ways and means of helping the young family I have been describing. They require some help from government to maintain a decent living standard. There has to be an awareness that help is needed, and there must be a commitment to provide that help. That must be provided through tax relief and properly adjusted family allowances and, above all, through a stable economy in which interest rates are brought down and stay there and in which inflation is brought down and stays there and in which the family can rely on a secure job.

Again, we must demonstrate that there is equity in the system to which a young man such as I have described contributes, because he contributes to it a fairly large slice of his tax. In 1965 he would have been paying 14 per cent of his income in tax. Now, the Government and the Opposition have him paying 20 per cent, which is just not on. Living side by side with someone who can successfully cheat the system can only undermine that family's confidence and faith in a stable society based on the family. The trouble is that bigger we make government, the more the taxpayer has to fork out. If he has to fork out more and more, it is inevitable that people will place their own interests before their community responsibility and will cheat.

Sadly, governments have created this situation by well meaning programs designed to help those in need, but we must face the fact that we have, at the same time, eroded community morality. The example of the young couple I have given living in such de facto arrangements, undeclared, epitomises the exploitation of the system only too well. That the couple should be so young and that their deceit is sanctioned by their parents only makes the example worse, because that is the fact of the matter.

Mr Aldred —And sanctioned by the socialists opposite.

Mr NEWMAN —Yes, I suppose that is true, too. One of the immediate responses that one could make to stop cheating is to call for bigger and better checks and surveillance, but Big Brother is already here and is set to get better and bigger, as we have seen with the Medicare arrangements. The real answer is to reduce big government, to reassert individual enterprise and responsibility, and to allow the market to operate more freely. Unfortunately, I have to say that that is a long way off. When I say that, I hope that this Opposition, as it formulates its new purposes and policies, will work to that ideal. This Budget takes Australia in a direction opposite to the one about which I have been speaking. It is making big government bigger, and it is the likes of my young Launceston family who stand to suffer.