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Wednesday, 3 October 1984
Page: 1097


Senator COLLARD(12.20) —We are discussing a package of six tax Bills which are part of the Government's Budget strategy. The Budget is a series of documents brought down once every year. The documents really are an indication of the Government's financial blueprint for the ensuing financial year. In latter years Budgets have become more and more a media event. We have the buildup to the Budget, the rumours and the predictions, then we have the Budget Speech and its prognosis by the instant experts as they hurry to catch the next day's headlines. This year the Government quite skilfully used the fact that the Budget can be a media event. Indeed I think it was the first time since Federation, or since the invention of television, that we have seen the Budget Speech as a television event when it was broadcast live from the other place.

It is very easy to be critical of those who have to be the instant experts, but we have to realise that they go into the lockup room late in the afternoon on the day the Budget Speech is to be delivered and they have deadlines to meet. In reality it is pretty hard to criticise them. As well as the Budget Speech there are at least 11 volumes to go through, so at best the immediate reactions are only from a cursory glance as they seek to make those deadlines. So on the night of the Budget we have the electronic media and their prognosis and the next day we have the headlines in the print media. Of course, that is the one avenue by which most people out in the streets receive the reaction to the Budget. When a Budget and a Budget Speech are designed around that fact there is a certain degree of success. That is what happened with the recent Budget. I have never seen a Budget Speech that said so little. It received the predictable electronic media reactions. There were the predicable headlines in the print media the next day such as '$7.60 tax cuts'. As a media event it was quite successful. I acknowledge that. We must acknowledge it.

Senator Maguire alluded to the opinion polls. The polls have indicated that the people were taken in by this media event. They have not had a chance to see through the facade to where the sting really is in this Budget. I do not think I have ever denied that Labor governments are big spending governments. When the Australian Labor Party came into government, government spending was 29.9 per cent of gross domestic product. In this 1984-85 Budget it has already gone up to 31.1 per cent of GDP. I have had a table prepared which shows the real increase in Budget outlays from the Whitlam years through to the Hawke years. I seek leave to have that table incorporated in Hansard. I showed it to the Attorney- General (Senator Gareth Evans) when he was present in the chamber.

Leave granted.

The table read as follows-

COMMONWEALTH OUTLAYS

*Real

increase

in Budget Government

Year outlays (%)

Whitlam 1973-74 5.6

1974-75 19.8 Average (3 Budgets) 10 per cent p.a.

1975-76 5.1 Fraser 1976-77 -0.8

1977-78 2.4

1978-79 1.7

1979-80 -0.5 Average (7 Budgets) 2.1 per cent p.a.

1980-81 4.0

1981-82 1.9

1982-83 6.3 Hawke 1983-84 8.2

1984-85 (est.) 5.0 Average (2 Budgets) 6.5 per cent p.a.

* Allowing for the inflation factor.


Senator COLLARD —The table brings out my point of Labor governments being big spending governments. For the three Whitlam Budgets the real increase in Budget outlays was 10 per cent per annum. For the seven Budgets of the Fraser-Anthony years the real increase was 2.1 per cent per annum. We have had two Budgets from the Hawke Government and their increase in real terms is 6.5 per cent per annum. Those figures are shown in the table which I have just incorporated. Labor governments are naturally big spending governments. When there is a financial problem, it can, but does not necessarily mean that a big spending government can get out of the trouble. It depends on how that money is spent. Unfortunately , it is being spent by beefing up the public sector, and this is not a recipe for retrieving the situation in which the Government finds itself.

I think everybody realises that as the private sector starts to make profits it will start to employ people in real jobs, not in funny jobs such as those being created now, such as the increase in jobs in the Public Service at both the Commonwealth and State level, particularly I understand in New South Wales and Victoria. So this is one of the problems with increasing government spending if the money is not being spent well. It must also be understood that where wages are applied without relevance to market forces they will eat up an inordinate amount of increases in government spending and they will not have any real effect on the unemployment situation.

Senator Peter Baume mentioned Medicare, and quite rightly. The enormous cost that Medicare is imposing on our Budget is something that we cannot afford and something that no country which has ever gone down the track of developing a similar health scheme has been able to afford, but it is there. It is quite interesting to look at the figures. I have had another table prepared which I would like to have incorporated in Hansard. I spoke to Senator Gareth Evans about it when he was at the table. I seek leave to have it incorporated, Mr Deputy President.

Leave granted.

The table read as follows-

BUDGET OUTLAYS ON HEALTH

Nominal

percentage

change

from

previous Government

Year $m year

Whitlam 1973-74 947 + 7.7

1974-75 1 283 + 35.6 (Medibank) 1975-76 2 953 +130.1 Fraser/Anthony 1976-77 2 543 - 13.9

1977-78 2 698 + 6.1

1978-79 2 901 + 7.5

1979-80 3 169 + 9.2

1980-81 3 645 + 15.0

1981-82 2 912 - 20.1

1982-83 3 425 + 17.6 Hawke (Medicare) 1983-84 4 411 + 28.8

1984-85 6 184 (est.) + 40.2


Senator COLLARD —This table shows Budget outlays on health and their nominal change from the previous years. It is quite interesting that in 1975-76, which was the year Medibank was really introduced into this country, we had an increase from $1.283 billion in 1974-75 to $2.953 billion in the one-line health item in the Commonwealth Budget. That is an increase in nominal terms of 130 per cent. Since Medicare has been introduced we have seen an increase in nominal terms of 28.8 per cent in the 1983-84 Budget and in the 1984-85 Budget there is an estimated increase of 40.2 per cent. In money terms there is an increase from $4.4 billion to $6.1 billion. I suggest that this country cannot afford that sort of increase. As Senator Baume has pointed out, everybody thinks that the one per cent levy covers the increase in health costs, when in actual fact it does not. This enormous increase is being topped up out of Consolidated Revenue.

When my friend and colleague Dr Glen Sheil was in the Senate-he will be back here very shortly-he used to have a saying that when something is free at the point of demand consumption rises astronomically. That is shown to be very true when we look not only at the increase in health costs with the introduction of Medibank and Medicare but also at the figures which have been issued on the usage of those schemes. The recuperative powers of the human body seem to degenerate quite markedly when people think there is a 'free' health scheme, not realising that somewhere somebody is paying. Australia, which was a fairly healthy nation when Medibank was introduced, became quite a sickly nation. I am quite sure that is happening under Medicare.

I do not like bulk billing. It is not that I am against helping the lower socio -economic groups or those people who are not able to afford good health care-by right any government should look after those whose means are such that they cannot provide themselves with adequate health care-but the minute we go down the track of bulk billing people become unaware of the actual cost to somebody else, in this case the taxpayer. That is one thing that I dislike intensely about the bulk billing syndrome. People are not aware of the cost of the system. There should be a means by which they are made aware of the cost and are then helped to pay it.

A big spending government is of necessity a high taxing government, and that is the situation with the Labor governments. We cannot look at the 1984-85 Budget in isolation. We have to look at the May mini-Budget of last year and at the 1983-84 Budget to get a total idea of how this Government is increasing its tax take. We have heard all about the tax concessions that will be granted on 1 November, yet the income tax collection this year will show an increase of 23 per cent, an increase of $5.6 billion, over that of last year. We have lost concessions such as the rebate for contributions to, for example, the Medical Benefits Fund of Australia Ltd and, the housing loan interest refund. As I said, we have to look at previous Budgets to see that built into the Labor Party Budget philosophy as well as its socialistic philosophy is the concept of increasing the income tax take year by year without its necessarily showing up, except in the raw figures at the end of the day. The average taxpayer is already worse off by $22 a week because of a loss of these concessions and all of the other Budget philosophies that have been brought down by this Labor Government. Yet this Government touts around the fact that on 1 November there will be tax reductions of an average of $7.60 per week. It is not a case of Peter being robbed to pay Paul; Paul has already been robbed to pay Paul.

We now have the introduction of a five-tiered tax scale. That means that with any slight wage increase over the next 12 months that $7.60 will basically be lost. Having already paid for it people will lose it very quickly. Another point about that five-tiered tax scale is that the $19,501 point at which the 46c in the dollar rate becomes operative has not been indexed. Another thing that people should know about this five-tiered scheme is that when a person earns $28 ,001 a new rate of 48c in the dollar becomes operative. So one need receive only a slight increase in wages and the $7.60 which has already been paid for is lost .

The fuel excise has been indexed, but it does not show up in the Budget. It does not show up as a new tax, yet it is there. The people should understand that a part of the fuel excise has been applied to the Australian Bicentennial Road Development Trust Fund, which we brought in to provide funding to bring all national highways up to at least an acceptable standard by 1988 and also to provide funds for urban transport. This Labor Government has indexed that excise and the additional money raised is going into Consolidated Revenue, not into the ABRD Trust Fund. So the extra excise that motorists are paying, that should be going towards bringing the roads of this nation up to an acceptable standard, is going into Consolidated Revenue and not to where the original legislation intended it to go.

In the last Budget we have seen an increase in aviation fuel excise. This Labor Government seems to think that aviation is still a tool of the rich instead of being part of the development of this nation. With our vast distances we probably need aviation more than most other nations. Australia has contributed much to world aviation in opening up long distance international air routes, in opening up this country and in the design of aircraft since Bernoulli developed his theory that enabled an aerofoil to operate in the way it does. Australia has made a tremendous contribution, yet the Labor Government still seems to think that aviation is an area that we can tax to blazes, that it is a tool of the rich man. Not only has it played a very vital part in opening up this country; it still plays a very vital part in the areas of communications and transport within this country.

This Government is by nature a big spending government. To fuel that big spending it is also a high taxing government. It is not coming to grips with the real problem. We are not addressing the problems of the high cost structure in this country. We are continually losing our international trade competitiveness and we survive only because we are a trading nation. The Government has not addressed the problem of youth unemployment. It is unfortunate that in the last few years wages for young people in this country have risen to a point where they are almost, if not completely, that for adults. Thus vast numbers of young people are on the unemployment files. This is a tragedy. They are growing up believing that they will never get a job. A graph could be drawn showing the relation between the increase in youth wages and the increase in the number of young people on the unemployment files.

This Government is not addressing the problem. It hides behind the prices and incomes accord. That still does not come to grips with the problem that our wages are not set in a market atmosphere. They do not bear any relation to the cost of production or the productivity of the workers. We cannot continue to go down that track and expect Utopia to be just around the corner. If this Government does not address the problems it faces, they will be the Hawke Government's Achilles' heel. It cannot keep talking up the economy and hiding behind the breaking of a drought and the previous Government's wage freeze. If the Government does not address the problems that are facing us we will be in for a severe time in the ensuing years. It is no wonder this Government wants to head down the track of an early election. It is a big spending government; as a result, it is a high tax government. Ultimately, it will bear that cost.