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Wednesday, 21 September 1983
Page: 1124


Mr RUDDOCK(7.13) —The honourable member for Bowman (Mr Keogh) has vigorously defended some aspects of his Government's Budget. I suspect that his constituents will make a very harsh judgment of him and his colleagues who have acquiesed so willingly in the imposition of an assets test that people, particularly the elderly, fail to understand and appreciate is required. The honourable member may be able to describe it glibly, as he has in terms of overhauling the social welfare system. He may be able to skate over some situations by suggesting that the objections that he has received were based upon a misunderstanding of the proposal and by suggesting also that the media might be blamed for this problem that some people have of misunderstanding this proposal.

I must say that people in my electorate who have seen me-numbers of them have seen me-have a pretty clear idea of what is involved in this proposal. Let us take, for instance, the old man who comes in and says: 'I will have to go into a nursing home. I am in need of medical care. My home will have to be sold and, of course, perhaps that will yield some assets'. Who will take that into account when looking at the question of his eligibility for a pension? I have had other people in similar situations, elderly people who want to move in with a young family. They have asked: 'What will happen if I use some of my funds that come from the sale of the home in which I live to add to my daughter's or my son's home and to provide a residence for me with some money left over? Does that mean that money that was previously not earning anything but which may come to me in this way will now be the subject of a very arduous test to ensure that it was invested in a particular way? Will my pension be worth less to me?' One might be able to blame the media or one might be able to say that it is all based upon a misunderstanding but it seems to me that people really do have a clear understanding of this proposal. They know that an assets test will make it very much more difficult for them in terms of their personal ability to organise their own affairs.

Yet I have had others come to me, whom I could only describe as sharp, who are already starting to work out the ways and means of getting around any assets test that the Government might impose. I do not particularly endorse such proposals but what will happen is that a limited group of people will lose their pensions as a result of this requirement while others, whom one might describe as being sharp, will not. There is certainly no misunderstanding of the proposal . It might well be argued that it is necessary to have some form of assets test. It might well be argued on economic grounds that that is appropriate. But honourable members should not get it into their minds that such a test can be imposed without hardship, without difficulty and without people being worried about their personal affairs and the way in which they will organise them.

The honourable member also made some comments about the Army Reserve. I too have had a number of complaints made to me about the taxation of Army Reserve pay. I am aware, of course, that, after that announcement had been made, the Minister for Defence (Mr Scholes) initiated an inquiry into Reserve pay. But the fact of the matter is that the question of Reserve pay and whether it is to be taxed is important. It is important in the minds of those who are serving. They are not unwilling to serve the nation but they believe they are entitled to be recompensed on the same basis as before. I think the recompense is grossly inadequate for the amount of time that people give up. I do not see the people involved as being selfish and as trying to earn significant additional moneys for themselves. I think it was most ungracious of the honourable member for Bowman to attack those who are prepared to complain that the Government has now decided to tax the Reserve pay that was previously untaxed. It is most ungracious of him to suggest that those people had some improper motives.

But those are not the really important questions involved in this Budget. This Budget has taken enormous risks with the Australian economy. The very foundation of the Budget, the prices and incomes accord, is already falling apart. It is obvious to all those who have read Statement No. 2 in Budget Paper No. 1 that the Department of the Treasury is gravely concerned about the strategy that the Government has announced. The prices and incomes accord, put in place in May and which was designed to avoid excessive wage demands, is already beyond repair. Mr Deputy Speaker, I do not need to remind you of union double dipping in wage settlements, such as the Heinz deal, in which a settlement of up to $15 to $20 a week was awarded. Mr Dolan, a constituent of mine and President of the Australian Council of Trade Unions, now says that that award will flow on. In the case before the Australian Conciliation and Arbitration Commission the Government has conceded a 4 per cent wage increase for all. All the speculation seems to suggest that that will amount to 4.3 per cent when the decision is brought down on Friday.

All of that sits very uncomfortably with the wage growth on which this Budget is predicated-namely, 7 per cent. The failure of the Budget strategy will have enormous consequences for unemployment, inflation and interest rates. Where is the human face of those who knowingly will permit this to happen? I do not ask honourable members to believe me but I quote from Statement No. 2 in Budget Paper No. 1-the document that the Treasurer (Mr Keating) vouched for-because it says exactly the same thing:

As the forecasting horizon is extended the uncertainties and risks attaching to the durability of the upturn greatly increase. Stripped down to its essentials, the task of maintaining the momentum of the pick-up in activity beyond 1983-84 hinges on the creation of an economic environment conducive to sustained growth in the private sector. Of those factors not directly subject to policy control, wage settlements in the year ahead have the greatest potential for influencing the outcomes for inflation, interest rates and corporate profitability-and hence private sector activity in the period beyond that.

A wages outcome higher than currently assumed would have an especially damaging impact on business confidence and private sector spending propensities. The renewal of pressures on corporate profitability, together with a consequent slackening in private demand, would be likely to manifest itself in a further round of labour shedding and another sharp ratcheting up in the rate of unemployment.

I could not have dreamed up words like that, but the meaning is clear. If that wage outcome on which this Budget has been predicated fails, there will be a significant increase in unemployment in Australia, and that ought to be of concern to every honourable member. The Budget has been presented as a strategy for recovery; yet we know now that at best unemployment could be higher by 90, 000 people this time next year. Where is the human face of those who would allow that to happen?

While we know that the Budget is stated to help home buyers without a general income tax rebate on interest, the Government now expects interest rates to rise , notwithstanding the recent and, I submit, temporary falls we have seen in the last few weeks. I do not ask honourable members to believe me on that. The Australian Chamber of Commerce commented in its bulletin on the Budget to very much the same effect. It said:

The enormous size of the proposed deficit, at $8.4 billion, is of a mammoth proportions and must create long term funding problems for the Government. Its effect on interest rates will be significant . . . The facts are, however, that an $8.4 billion deficit is not acceptable and will prove to be very difficult to manage . . . There are four major-and closely inter-related-risks to achievement of sustained recovery in the domestic economy in the period ahead. These relate to interest rates, inflation, the balance of payments and high uncertainty linked with low private sector confidence . . . The fundamental issue is not, however, whether interest rates will rise or fall in 1983-84; rather it is whether, given the configuration of other economic variables, they will be at a level which is conducive to or inhibits a durable revival in private sector spending.

Net borrowing by the public as a proportion of GDP more than doubled in 1982-83 and a further sharp increase is in prospect for 1983-84. Even with a further fall in corporate net borrowing in 1983-84, the combined borrowing of the public and corporate sectors is projected to rise to the highest level relative to GDP for at least the past twenty-five years.

In 1983-84 the financing of the very large Commonwealth budget deficit in a way consistent with the overall thrust of policy will require very large volumes of Government securities to be placed with the non-bank sector.

I think all honourable members understand the message in that. If they do not, I think they are indeed ignorant. While the taxes which could have imposed by the Budget, had speculation generated beforehand been correct, have not been put in place, the Budget, with indirect hikes now indexed together with new charges, will add almost $14 a week to the expenses of average Australians. On top of all the tax changes in May and August, we have seen new and drastic charges in areas previously sacrosanct. No Liberal government ever proposed an increased tax on lump sum superannuation payments. Yet with this new legislation imminent the Government proposes its own double dipping into the pockets of Australians-more so for those in Canberra for whom I have a responsibility as shadow Minister- with a new and undefined assets test to exclude Australians from an entitlement to a pension in their twilight years.

Because of my special responsiblities I want to talk about the Budget effects on Canberra in particular. On Budget night I described the Budget as it effects Canberrans as a disaster. Shortly stated, expenditure on Australian Capital Territory municipal services and activities is down in real terms, while rates and charges have been raised significantly. I have said to Canberrans: 'You do not need to tell me that rates, even after the reduction because of the revaluation of property values, are up significantly, as are water rates and sewerage rates. You do not need to tell me that your car registration fees are up and that driver's licence fees rose by 200 per cent'. By now I had said to them: 'You should all appreciate the good news for Canberrans!'

The Minister for Territories and Local Government (Mr Uren) claimed that expenditure through his portfolio would increase this year by 19 per cent. What he did not tell you, Mr Speaker, or me was that the breakdown of expenditure within his responsibilities was as follows: First, expenditure through the Department of Territories and Local Government is $137.7m, up $8.6m or 6.2 per cent. This is less than the rate of inflation and, as a result, specific areas of expenditure in the Territory have been reduced directly and in real terms. Secondly, expenditure through the National Capital Development Commission is $ 123.1m, up $13.5m or 10.96 per cent. This is nominally less than the rate of inflation in the year past and, while expenditure on land servicing is up, as is expenditure on housing, there have been corresponding reductions in other areas of expenditure, particularly in the provision of new and renovated office accommodation in Canberra. Thirdly, expenditure through the Parliament House Construction Authority-I know that this is a matter dear to your heart, Mr Speaker-is up by $34.7m to $90.1m. That is an increase of 58 per cent.

The real increase, therefore, in expenditure this year in the Australian Capital Territory is not as a result of expenditure through the Department or as a result of expenditure through the National Capital Development Commission but as a result of expenditure on the new Parliament House building which is on a timetable for completion in 1988. Any government would have been obliged to find these moneys for these works this year. It is not for one Party or the other to claim credit for this project. The new Parliament House building and the Defence Force Academy, however, both major development projects, were commenced and committed for the national capital by the previous Government. The real reductions in the Australian Capital Territory are in town services, lighting, maintenance for parks, recreation reserves, cleaning public places, the Canberra Tourist Bureau and the National Exhibition Centre. I think these points need to be understood by honourable members when they are given figures which suggest that there has been a 19 per cent increase in real terms in expenditure on the Australian Capital Territory.

I was asked what different emphasis I would put on the framing of a budget for Canberra and, while not rewriting Labor's Australian Capital Territory budget, I answer in this way: My emphasis would be on the creation of an environment for and encouraging private sector development in the Territory. Increased funds would have been better placed on providing additional facilities and for attracting new industries to Canberra. My colleagues remind me that real levels of expenditure in the areas of health and education in the Australian Capital Territory have also suffered. I would like to make some comments at length about the future of Canberra, but I suspect that time will intervene and that I might not be able to make those comments at the length I would like. But I think it important to recognise that the new Government ought to be following its rhetoric which is along the lines of 'We regard the private sector and private sector investment as important for the provision of opportunities for Canberra's young people'. But the Government has taken a number of decisions which are likely to mitigate against private sector investment in Canberra. Those are matters about which I would like to talk at length. I suspect I will have to put them aside for another occasion.

Debate interrupted.