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Thursday, 12 May 1994
Page: 805

Senator BOSWELL (Leader of the National Party of Australia) (8.19 p.m.) —The 1994-95 budget is a document standing on poor foundations. It is built upon the foundations of hope—not substance. The government does very little to reinforce those foundations for the private sector, the sector on which it is basing all its hope. The budget is framed in the context of an Australia climbing out of recession and an Australia that suffered from many policy decisions of this government, particularly the extended period of high interest rates which have done so much damage to our existing industries and businesses.

  We are an Australia that is losing its traditional manufacturing base, with more and more Australian industries moving offshore. We are an Australia whose mining companies are spending increasing proportions of their exploration budgets on overseas projects. We have an efficient rural producing sector still struggling to stay afloat after years of unfair international trading practices which have lowered commodity prices, after the ravages of drought and after the high interest rate policies of the Labor government.

  We have entered a new period of growth but, through this budget, the growth dividend from a stronger economy is being used by the government to boost spending rather than to reduce the deficit. Growth is optimistically predicted by the government to be at least four per cent over the next four years, and the recovery period is forecast to last for longer than any other recovery period since the 1960s.

  The official budget deficit is $11.7 billion, down from an estimated deficit of $13.6 billion last year. But included in this are asset sales, still to be sanctioned by the ALP Left, of $2.5 billion. When we include the asset sales, transfer of state debt payments and Reserve Bank profits, the real deficit figure is more like $18 billion.

  This budget is silent on any new measures that address new capital investment for business, although it is based on a 14.5 per cent industry investment growth prediction. It fails to provide an environment that will stem the flow of industry and mining investments offshore. It is virtually silent on positives for the vast rural industries which still play their major role in export earnings and underpinning the living standards of all Australians.

  Personal income tax may not have obviously risen in the budget, but PAYE taxpayers will pay 8.1 per cent more income tax than last year. The promise of the second tax cuts seems to have faded from view forever. It seems that the promise of Mr Keating to return to taxpayers the impact of inflation over the next two years has gone the same way.

  Our productive sectors will have increased burdens from increases in fuel excise already set in the pipeline by the government. Leaded petrol will increase by 2c in August, with unleaded petrol and diesel up 1c.

  Our basic infrastructure, such as our road system, has received reduced funding of $200 million in the budget. Over the last two years road funding has seen a reduction of almost half. In fact, forward estimates confirm that road funding will remain at levels that are, in actual dollar terms, below those of 1982-83. If the government is going to base its future hopes on a reviving business sector and increased exports, it cannot neglect the requirements such as our road system. The essential need for a strong and viable regional Australia has been given scant attention, despite the many government commissioned papers and recommendations. The white paper last week allocated a paltry $29.1 million to be spent this year on regional development, with over two-thirds of that going to Canberra's sewerage system.

  The budget, as it affects rural Australia, will do little to boost the rural and resources industries on which the government has pinned its hopes. While budget papers show an increase in government outlays of 5.9 per cent for primary industries in 1994-95, rural sector outlays will actually decrease. Wool growers have been told that their woes are now over and that they will no longer receive exceptional circumstances interest rate assistance. In reality, only nine per cent of all wool growers are presently making a positive income. Just one more year of assistance would have allowed many wool growers to stay on their farms and rebuild their flocks. The premature ending of exceptional circumstances assistance could be the end of many of them.

  Any increase in rural funding is because the diesel fuel rebate is up $56 million as a result of the government continuing to increase fuel excise and also because this year the government spent only $24.7 million on RAS, the rural adjustment scheme. It will spend $83 million this year, a more normal amount. In total, only $112 million, including $87 million from state reserves, was spent on RAS this year. This was $45 million less than predicted in last year's budget.

  I have long been an advocate of more equitable rural adjustment measures. The fact that there are millions of dollars in RAS reserves means that the government has done a very sloppy job in matching funds to needs. It has made the eligibility criteria too strict for farmers suffering adverse circumstances beyond their control. The much touted wool package of the previous minister is a case in point: $44.6 million he promised to 5,790 specialist woolgrowers. By the end of December 1993, there were only 1,367 approvals nationwide, with a miserly 214 from Queensland.

  Time and time again we have asked, as has the wool industry, for the eligibility criteria regarding the 65 per cent income from wool requirements to be eased. It was impossible to live on your income if at least 65 per cent of it came from wool because the prices were so low. But, no, the government was happy to see the money go unspent so it could embark on the recycling venture which we see in the budget this week. RAS reserves of $45.7 million are now to go into a mystical kind of regional fund if not spent on direct farmer aid.

  In 1993-94 the states were to contribute $103.8 million in RAS reserves to the RAS budget. This was on top of nearly $13 million savings not spent from the exceptional circumstances package. This week's budget papers say, however, that $87 million of state reserves were drawn upon, leaving $45 million available for a downturn in the future. Every year the government puts out two budget bins for collection, one for the ordinary money to go out and one with a yellow top for recycling. The government promises funds and packages of all shapes and sizes, gets great media coverage, and then keeps a lot of the money so that it can make the same promises again the next round.

  Meanwhile, there are efficient producers out west who have cashed in their super, who cannot get RAS or JSA, who have pulled their kids out of school, who have laid off workers and who have hand-fed their dwindling stock for three years. This year 4,400 out of 8,500 RAS approvals received exceptional circumstances funding. That is over half the client base, and the minister publicly acknowledged that it will take a couple of years for farmers to get back on their feet. So why has the government allocated only a paltry $2.5 million to extend drought exceptional circumstances funding for a mere six months and ended wool exceptional circumstances funding altogether?

  Then there is the regional rhetoric. The minister wants Australian farmers to engage in a lucky dip, to compete for regional project funds—only there will probably be two boxes for the proposals, one for the Labor marginal electorates and one for the rest. There is to be a competitive bidding process for funding from the reserves plus a state RAS levy. How will the government decide who is to receive funds and where? Will influential, well-connected groups thrive, while individual farmers lose out? There is great scope for discrimination. The first priority for RAS is to give a solid commitment to direct farm assistance, yet nowhere in this budget is such a figure or commitment to be found.

  The $252 million approved funding in the budget for interest subsidies over three years does not sound too hot when we consider that total expenditure in 1992-93 was $166 million—and that was not enough to stop hundreds of family farmers from doing it real tough.

  The government has done some creative work with the primary industry budget. While the budget shows $1.7 billion will be spent on agriculture, forestry and fishing, farmers themselves will contribute $728 million in taxes and charges, and $515 million in diesel fuel rebates. A further $90.3 million will go to the department and $15.3 million in redundancy payments to surplus meat inspectors—reforms that the government should have undertaken years ago to remove excess cost from the meat industry.

  Tobacco growers are to suffer a further fallout from five per cent excise rises in August and February next. With this $133 million windfall to the government, the government should set it aside to fund a buyout scheme for the tobacco industry. The government also should have addressed the restructuring needs of the citrus industry and provided for the recommendations of its own task force. The needs of the citrus industry are urgent due to the implementation of the Uruguay Round. The government's own citrus task force recommendations should have been provided for and the recommended sales tax exemptions introduced.

  A problem which affects all Australia and hurts rural people hard is unemployment, with one-third of our under 25-year-olds unemployed. In last week's white paper on employment, spending on labour market programs skyrocketed to over $3 billion over four years, yet the government has never got unemployment below 10 per cent. This year through the job compact the government has expanded the jobstart wage subsidy program with a youth training component, after receiving permission from its masters, the ACTU.

  We in the coalition have long advocated the necessity of having a youth training wage, an essential provision if the young people are ever to get a crack at the work force and acquire experience. While the job compact encompasses programs targeted at the unemployed in rural and regional Australia, the private base sector in these areas is small with limited prospects. Most jobstart opportunities come from industries based in the capital cities. Not much is going on in the regions.

  The one program specifically targeted at regional Australia—the new work opportunities program—which involves landcare projects and human services programs, such as care for the elderly, will not provide great opportunities to the average rural youngster. Those priorities will be given to the indigenous Australians and some of the disabled. While we do not oppose that, we make the point that it excludes some jobs that would have gone to regional youth.

  With the budget allocation of $1.5 billion for an Aboriginal land fund, it is hoped the experience of the Northern Territory is not followed, where good cattle country has been bought only to be taken out of production. The fund potentially represents a large number of properties that could be purchased. Any loss of production will have definite flow-on effects, not only to output but also to rural employment through reduced throughput at abattoirs and in the road transport industry—just to name two examples.

  Small business, which represents 700,000 companies and employs 2,570,000 people, has not been helped by this budget. The government has failed to reduce costs and charges on small business. The superannuation guarantee levy, sales tax, payroll tax, fuel tax and fringe benefits tax all rise under this budget. Fringe benefits tax is up 131 per cent, sales tax will return 8 per cent more, with petrol tax up 13 per cent more on ordinary motorists and businesses. Fuel excise has now reached 30c a litre—not only a massive cost impost on freight and transport, but all adding costs on to our exporters competing in a world market where foreign governments do not impose the same harsh taxes on their exporters.

  The small business sector should be the powerhouse of the Australian economy. It has the ability to respond quickly to employ more people. It is innovative and flexible. It should be encouraged so it can create more jobs and solve Australia's unemployment. Yet even the white paper on unemployment will create further worries for small business, with the confirmation yesterday that businesses taking on the unemployed under subsidies will be subject to the oncosts of workers compensation, superannuation and the oppressive dismissal provisions of the government's new industrial relations legislation.

  As well, out of the budget small business got higher registration and corporation fees despite seeking relief from real measures that unfairly impose costs on them. Just changes were refused to small businesses, such as the reduction in the provisional tax uplift factor, deferral on capital gains tax where rolled into another business, relief from indirect taxes on business inputs and exporters, and tax concessions for training and establishment costs. Neither small business, nor big business, nor our exporting, mining and agricultural industries has been assisted by this budget.

  The government is keen to stress the growth of elaborately transformed manufactures which earned $18 billion in export earnings last year. It is good to see the export base being broadened and the increasing contribution from ETMs, but at the same time we are rapidly losing our traditional manufacturing base. Last year $8 billion worth of manufacturing industry was lost offshore from New South Wales alone. Thirteen per cent of the exporters that the McKinsey inquiry spoke to had moved offshore, with a further 50 per cent planning to do so. Manufacturing is going backwards, with imports going up more rapidly than exports. Our manufacturing trade deficit is higher now than ever. The government must not lose sight of what industries it already has here, what we are good at and what we do well. The government must not lose sight of the substance for the myth.

  The government would do well to remember Senator Evans's words to the NFF dinner last night. He said that the agriculture sector `had not only been exporting longer and harder than any other industry in Australia, but it has for many years helped secure for Australians one of the highest per capita incomes in the world' and that the latest international projections show the world's population doubling by the year 2050 and the demand for food trebling, with a decline in food production of up to 30 per cent.

  At the same time through this budget the government is cutting off the short-term lifeline to wool growers by concluding exceptional circumstances assistance to wool growers when it can underspend on rural assistance programs by $45 million last year and when it can cut spending to essential research bodies such as the CSIRO by 2.5 per cent.

  The white paper delivered last week misrepresented funding increases for science agencies when in fact the CSIRO will be at least $15 million to $20 million worse off this year. With this decrease comes a probable loss of 200 positions, especially in rural research. The budget has further decreased funding to the CSIRO this year by 2.5 per cent, with a further decline over the next three years of 5.6 per cent in real terms—another assault on rural industry research and a further cruel blow to the wool industry.

  The government must not lose sight of our well established rural and mining industries, which still earn Australia a combined export income of $37 billion. We must also try to retain our basic manufacturing industries. We must value add to our primary industries and not have a repeat of incidents such as the loss of our opportunity to enter the refined sugar export market by rejecting the merger that would have created a large export refinery in Mackay. We must take advantage of our clean food produced in Australia and our proximity to the large markets in Asia.

  In this budget, the government has squandered the benefits of our economic recovery. Less than half of the windfall gains from improved and faster economic growth have been used to cut the deficit. It consists of overoptimistic economic forecasts and overreliance on investment growth. In this budget, the government has turned Australia from the lucky country into the hoping country.

  This budget has neglected to address the real reforms that could make Australian industry and business more internationally competitive. It does nothing to speed up the pace of micro-economic reform, improve the taxation system, reduce business costs or encourage more innovative work practices. This budget hits business and the productive sector rather than helps them. At the same time our productive enterprises bear the responsibility of making the government's hopeful budget come true.