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Tuesday, 21 August 1973
Page: 103

This function brings together the various services and categories of assistance provided by the Australian Government to industry and the community generally. It embraces both the provision of economic infrastructure and more direct forms of participation in economic activity.

A.   TRANSPORT AND COMMUNICATION

The Australian Government is heavily involved in providing services in this field. Total outlays on transport and communication are estimated to increase by $128.8 million in 1973-74, to $879.5 million.

Communication

Post Office

The Post Office undertakes a large capital program to meet the demand for new and improved services, particularly in the field of telecommunications. That program, which is estimated to exceed $500 million in 1973-74, is financed partly from Post Office internal resources (mainly from depreciation provisions and any trading surplus), and partly by interest-bearing advances from the budget.

Outlays shown in the table represent advances from the budget to the capital program of the Post Office; advances in 1973-74 are estimated at $320 million, compared with $288 million in 1972-73. The operational expenditure of the Post Office - estimated at about $1,000 million in 1973-74 - is financed by the Post Office from its own revenue and, therefore, does not involve any direct call on the budget.

Am Transport

Advances by the Australian Government to Qantas Airways Limited and the Australian National Airlines Commission mainly represent the passing on of proceeds of loans raised by the Government on behalf of the airlines to assist in the financing of aircraft. Amounts repaid by the airlines in respect of past loans are in turn repaid to the lenders. Advances also include new capital provided to the airlines from time to time; in 1972-73 new capital of $25 million was paid to Qantas but no such provision has been made for 1973-74.

The Department of Civil Aviation carries out many services for the civil aviation industry, including the operation and maintenance of over 100 airports and of a wide range of navigation facilities throughout Australia. Outlays on these services in 1973-74 are estimated to increase by $10.2 million, to $112.9 million.

For many years the Australian Government has paid air services subsidies in respect of essential' rural services to country areas and of 'developmental' services to outback areas. An amount of $2.0 million is included in the budget for these services in 1973-74. As announced in the Budget Speech, however, subsidies for 'essential' rural services will cease on 30 June 1974 and the developmental services subsidy will be phased out over the next four years.

During 1973-74 the Government of Papua New Guinea is expected to assume responsibility for civil aviation matters in that country, and for that purpose would take over various assets of the Department of Civil Aviation. The Department will continue to provide certain services and to carry out air safety functions on an agency basis. The expected increase of $36.9 million in 'other recoveries' in 1973-74 is attributable largely to receipts associated with the transfer of those assets and payments for the services to be performed after the change over.

As announced in the Budget Speech, the Government has decided to move to increase the rate of recovery of the costs of civil aviation to 80 per cent within five years. Air navigation charges to airlines are to be increased from 1 December 1973 by 10 per cent, the maximum increase allowable under the existing Airlines Agreements with the two major domestic airlines. Charges to general aviation will be increased by substantially more than 10 per cent. These increases are estimated to yield additional revenue of approximately $1 .8 million in 1973-74. It is proposed to renegotiate the Airlines Agreements to remove the existing constraints on rates of increases in air navigation charges and aviation fuel taxes.

It has been decided also to adopt a policy of recovering the full cost of airport terminals from occupants. This policy will be implemented in respect of future terminals, and existing terminals as present lease agreements expire.

Road Transport

Under the Commonwealth Aid Roads Act 1969, the Australian Government is providing grants to the States for roads totalling $1,252 million over the five-year period ending 1973-74; provision is made for the balance of the program- $316.8 million- in this year's estimates.

To assist the States to effect traffic management improvements at locations with poor accident records the Government is providing grants to the States totalling S3 million in 1973-74.

The Australian Government has for a number of years made available specific grants and loans for the construction and improvement of certain roads used for the transport of beef cattle. The construction of these roads is aimed particularly at increasing the turn-off of beef cattle for export. An amount of $7 . 6 million is included in the budget for these purposes in 1973-74, of which $5.4 million is for roads in the States and the balance for roads in the Northern Territory.

Expenditure in 1973-74 includes $9 . 3 million for roads in the Australian Capital Territory and $13.1 million for roads and highways in the Northern Territory. Additional amounts of $3 . 1 million are included for the operation of the City Omnibus Service and Government car fleet in the Australian Capital Territory, together with $1 . 3 million for the Central Transport Pool of the Department of the Northern Territory.

Rail Transport

An amount of $14.7 million is included in the estimates to finance the capital works and services program of the Commonwealth Railways. This sum includes almost $9 million for the Trans-Australia railway and $2.3 million for the North Australia railway. It also includes provision of $2.5 million for the proposed Tarcoola-Alice Springs railway, the construction of which is subject to agreement with the South Australian Government and passage of the necessary legislation.

Financial assistance has been provided to the States for expenditure on various railway projects since 1951-52. Currently, assistance is being provided for completion of work on the standard gauge line between Port Pirie and Broken Hill, and for work on the final stage of the standard gauge line from Kwinana to Kalgoorlie in Western Australia.

Urban Public Transport Improvement

As part of its broad initiative to improve living conditions in cities (see section on Housing and Community Amenities nec'), the Government is extending $32.1 million to the States in 1973-74 to upgrade urban public transport systems. Under this program the Australian Government will provide finance for two-thirds of the costs of approved projects.

Shipping and Harbours

The estimates include provision for a loan of $7.0 million to the Australian Coastal Shipping Commission in 1973-74 to finance capital expenditure by the Commission.

Other' outlays of $4.8 million in 1973-74 include $3 million for capital expenditure, mainly by the Department of Transport on vessels and navigational aids and facilities, and a subsidy of $1 .0 million for the 'Empress of Australia' passenger service between Tasmania and the mainland. This subsidy is to be reviewed in three years.

Repayments of $9 million by the Australian Coastal Shipping Commission in respect of earlier loans account for most of the repayments of $9.7 million estimated for 1973-74.

Pipelines

The Government has established the Pipeline Authority to provide and operate pipelines for the carriage of petroleum. An advance to the Authority of $107.0 million is to be made in 1973- 74. This will enable the Authority to pay $10.4 million to the Department of Minerals and Energy in respect of pipes purchased on the Authority's behalf by the Department in 1972-73 for the Gidgealpa pipeline and provide for further expenditure of $96.6 million on that pipeline in 1973-74.

General Administrative and Other Expenditure

An amount of $15.0 million is provided in 1973-74 for the running expenses of the Department of Transport, including $9.3 million for wages and salaries.

Recoveries

Light dues, which are estimated to yield $10. 1 million in 1973-74, are the major source of recoveries under this head. As announced in the Budget Speech these dues, which are charges on commercial shipping for the use of marine navigational aids provided by the Australian Government, are to be increased by 6 cents to 31 cents per net registered ton per quarter from 1 October 1973.

Recoveries in 1973-74 will also include the proceeds of the sale of marine navigation aids in Papua New Guinea to the Papua New Guinea Government ($1.3 million) and recoveries from that Government in respect of expenditure incurred by the Department of Transport on the maintenance of navigational aids in the Territory.

B.   WATER SUPPLY AND ELECTRICITY

As shown in the following table, outlays from the budget on water supply and electricity projects are estimated to total $55.8 million in 1973-74, an increase of $18.5 million compared with 1972-73.

Snowy Mountains Scheme

The diminishing level of outlays on the Snowy Mountains Scheme over recent years reflects progress towards completion of the Scheme. The proposed payment of $13 . 1 million to the Authority in 1973-74 comprises $9.4 million for its capital works and an amount of $3.7 million for a once-only payment by the Authority to the River Murray Commission, reimbursing half of the cost of increasing the capacity of the Hume Weir to cater for the diversion of the Snowy River to the River Murray.

Gladstone Power Station

The Australian Government is providing financial assistance to the Queensland Government, by way of loans, to help finance the construction of a thermal power station at Gladstone in central Queensland. Assistance provided by the Australian Government for (he project is proportionate to the total cost of the power station in the ratio of 80 to 155. An initial amount of $14 million was paid to the State in 1972-73 and it is estimated that a further $33.8 million will be made available in 1973-74.

Repayments

Most of the increase of $3.3 million in 1973-74 is attributable to principal repayments due from Tasmania in respect of hydro-electric power development assistance.

C.   INDUSTRY ASSISTANCE

The Australian Government assists industry through a variety of measures, including direct financial assistance, taxation concessions, guaranteed home price arrangements, financial guarantees and the customs tariff.

Direct assistance provided to industry from the budget is estimated at $515.0 million in 1973-74, an increase of $71 .9 million compared with actual outlays shown for 1972-73. This comparison is affected by the fact that the 1972-73 figures are net of repayments by the Australian Wool Commission and the Australian Wheat Board of advances totalling $77.2 million; such transactions do not recur in 1973-74.

Direct industry assistance takes the form of bounties and subsidies, reconstruction schemes, contributions to research and promotion programs, and other payments to or for the benefit of industry. It includes also some outlays by government departments and instrumentalities (e.g. Department of Overseas Trade, Bureau of Agricultural Economics and the Australian Tourist Commission); such organisations provide many services either free of charge or at prices which do not recover fully the costs incurred.

Apart from these direct outlays from the budget, substantial additional assistance has been, as noted above, provided through the budget by way of special taxation concessions which, as they result in a reduction of Government revenues, are as much a call on the budget as direct outlays. The amount of revenue forgone in 1972-73 through the main taxation concessions for which data are available is estimated to have been $289 million. Further information relating to these taxation concessions is provided at the end of the commentary on this sub-function.

Outlays under some other functional headings in this Statement also assist industry. Examples include the provision of airports and airway facilities for the aviation industry, some specific purpose payments to the States (e.g. for beef roads), expenditure to improve the defence capacity of industry and part of the payment to CSIRO.

Outlays for direct industry assistance in recent years, together with estimates for 1973-74, are shown in the following table and discussed in the related brief commentary.

 

Forestry and Fishing Industries

Under the Softwood Forestry Agreements Act 1972 the Australian Government is providing financial assistance for a further five-year planting program ending on 30 June 1976. As in the previous Agreement, the assistance to be provided is to be by way of interest bearing loans repayable over twenty-five years, with repayments and the payment of interest to commence approximately ten years after the date of each advance.

During 1972-73 payments amounting to $9.5 million were made to the States in respect of the 1971-72 and 1972-73 planting years and these represent the initial payments to the States under this new Agreement. It is estimated that further payments of $5.5 million will be made in 1973-74.

Agricultural and Pastoral Industries

Wool Industry

The Wool Corporation, which took over from the Wool Commission, is expected to perform its functions, including the operation of a flexible reserve price scheme, without recourse to assistance from the budget in 1973-74.

Wool Deficiency Payments were originally envisaged as applying to the 1971-72 wool clip only. The scheme was subsequently extended to the next season but has now expired; the provision of 80.1 million in 1973-74 is to meet a carry-over of administrative costs associated with the scheme. An amount of 80.6 million is provided to finalise payments in respect of the Price Averaging Plan for small lots, Government support for which expired on 30 June 1973.

Of the estimated expenditure of 843.6 million in 1973-74 for wool research and promotion, about half is to be contributed by the industry in the form of wool tax (see Statement No. 5 for further details).

Wheat Industry

In recent years advances have been made from the budget to the Australian Wheat Board to enable the Board to meet its commitments. At present no Australian Government advances are outstanding to the Board and no advances are provided for in 1973-74.

The fifth Wheat Industry Stabilization Plan has been extended for one season pending the introduction of a new longer-term scheme to operate from December 1974. The amount of 816.0 million included in the estimates is less than the payments made in previous years because of the low level of exports from the 1972-73 harvest and higher export prices.

Dairy Industry

The total decrease of $10.6 million in payments of butter and cheese bounties and the processed milk products bounty in 1973-74 reflects the Government's decision to phase out these bounties over the two years 1973-74 and 1974-75.

An amount of $3 . 1 million is included in the estimates for payment to the States under the Marginal Dairy Farms Reconstruction Scheme. The Government has indicated its readiness to provide additional assistance to assist the dairy industry to adjust to changing circumstances.

Of the $2.8 million estimated to be spent on research and promotion in 1973-74, an amount of $2.4 million is to be provided by the industry through the dairy industry levies.

Fruit Industry

The Australian Government guarantees minimum returns under stabilization schemes for apples and pears and for dried vine fruits; a total of $2.7 million is provided for these purposes in 1973-74, compared with $4.0 million in 1972-73.

Under the Fruitgrowing Reconstruction Scheme introduced in 1972 the States were offered $4.6 million in financial assistance toward a scheme for the removal of trees producing fruit deemed to be surplus to long-term market requirements. Expenditure in 1972-73 was $0.4 million and the estimate for 1973-74 is $2.0 million.

Poultry Industry

Expenditure on stabilization and research in the poultry industry is estimated to decline by $2.1 million to $11.9 million in 1973-74. Most of these payments are financed from industry levies and flow back to the industry through State egg marketing authorities in accordance with the egg industry stabilization scheme.

Appropriation Bill (No. 1)21 August 1973 REPRESENTATIVES 113

Cattle, Sheep and Pig Meat Industry

The Australian Government has assisted the States in financing an intensified campaign for the eradication of bovine brucellosis and tuberculosis since January 1970. By June 1973 $8.0 million had been paid to the States and a further $4.9 million is provided in the estimates for 1973-74. As announced in the Budget Speech, the Australian Government has decided to recoup from the industry the expenditure it will incur for this purpose from 1973-74 (see Statement No. 5 for further details).

Most of the expenditure on research and promotion is financed by industry levies.

Expenditure not Allocated to Specific Agricultural and Pastoral Industries

Rural Lending

An amount of $10.0 million was advanced in 1971-72 to enable the Commonwealth Development Bank to lend for farm build-up purposes. The Government has decided to provide $20.0 million in 1973-74 for a further widening of the purposes for which the Bank can lend to the rural sector.

Rural Reconstruction Scheme

Under the States Grants (Rural Reconstruction) Act the Australian Government agreed to provide $100.0 million to the States over a four-year period for the purposes of debt reconstruction, farm build-up and the rehabilitation of farmers obliged to seek alternative employment. Nearly $95 million had been paid to the States by 30 June 1973, and in 1973-74 payment is expected to be made of the $5 million remaining from that provision, together with $42 million from the additional amount of $54 million which the Government has agreed to make available in recognition of the continuing need for adjustment.

Fertilizer Bounties

Expenditure on fertilizer bounties, which increased sharply to $69.8 million in 1972-73, is estimated to total $61 . 0 million in 1973-74.

Inspection Services

The Commerce (Trade Descriptions) Act involves the Australian Government in substantial expenditures on inspection services, particularly in respect of meat for export. As announced in the Budget Speech, the Government has decided to recoup expenditure on export meat inspection from the industry by imposing a charge on the export of meat (details are provided in Statement No. 5).

Agricultural Extension and Research

Since 1948-49 annual grants have been made to the States to promote improved farm practices in the dairy industry and since 1952-53 further grants have been provided for expansion in the States of agricultural advisory services generally. In addition to the funds provided to the States, a small amount is expended directly by the Australian Government on projects nominated by the States but of common interest. Up to 30 June 1973 nearly $46 million had been provided for these purposes; a further $7.2 million is included in the estimates for 1973-74.

Territories- Agricultural Services and Projects

Outlays on agricultural services and projects in the Territories are estimated to total $1 .8 million in 1973-74, compared with $1.6 million in 1972-73.

The 1973-74 estimate makes allowance for the Government's decisions, arising out of consideration of items in the Coombs Report, to abolish rail freight subsidies and the freight subsidy for breeding stock in the Northern Territory.

Irrigation and Other Pastoral Water Projects

Expenditure under this heading comprises Australian Government financial assistance to the States for rural water conservation and irrigation purposes, and flood mitigation. The main expenditures provided for in 1973-74 are for the Bundaberg Irrigation scheme in Queensland ($3.2 million), the Copeton Dam on the Gwydir River in New South Wales ($2.0 million), the Dartmouth Dam in South Australia ($1.1 million) and the Ord River Dam. in Western Australia ($1.1 million).

Payments to the States estimated at $4.6 million in 1973-74 are provided for as part of the three year program of surface water measurement and underground water resources investigations which commenced this year.

Additional information on these projects is contained in the White Paper entitled Payments To or For the States, 1973-74.

Mining Industry

An amount of $1 .0 million is provided in the budget for a program of core drilling to obtain additional information on Australia's recoverable coal reserves.

The Government has announced that the petroleum search subsidy scheme - for which $8.5 million is included in the budget - will expire at 30 June 1974.

Manufacturing Industry

Assistance to manufacturing industry is estimated to increase by $34.1 million to $144.5 million in 1973-74.

The Industrial Research and Development Grants Scheme is to be reviewed. Expenditure on the scheme is estimated at $16.8 million in 1973-74, compared with $14.1 million in 1972-73.

Outlays on export incentive grants and pay-roll tax rebates are estimated at $74.0 million in 1973-74, an increase of $15.7 million on last year; the Government has announced that the future of these arrangements beyond 1973-74 is to be reviewed during the year.

An initial allocation of $10.0 million has been included in the estimates for 1973-74 to assist firms affected by the 25 per cent tariff reduction announced on 18 July. This assistance will be available to help firms to adapt to the new situation and to provide compensation to firms which, unable to adapt, are forced to close.

Tourist Industry

Total outlays to assist the tourist industry are estimated at $5.8 million in 1973-74, $2.3 million more than in 1972-73.

Other Assistance to Industry

The Petroleum Products Prices Stabilization Scheme provides a subsidy to users of certain petroleum products in non-metropolitan areas such that wholesale prices in those areas do not exceed metropolitan prices by more than 3.3 cents per gallon.

The Government proposes, as announced in the Budget Speech, to increase the margin specified in the scheme from the present 3 . 3 cents to 5 cents per gallon. Outlays under the scheme in 1973-74 are estimated at $25.8 million, only slightly above actual outlays in 1972-73.

Expenditure on export promotion in 1973-74 is estimated at $13.9 million, comprising expenditures on the Trade Commissioner Service ($8.9 million), matching grants to primary product marketing boards ($1.2 million) and trade publicity, fairs and displays ($3.9 million).

Industry Assistance Through the Taxation System

As mentioned earlier in this Statement, a considerable amount of assistance to industry has been provided in the past through special taxation concessions. Some of these concessions were withdrawn during 1972-73 and, as indicated in the Budget Speech, legislation is to be introduced withdrawing certain others.

Such concessions result in a reduction of Australian Government revenues (and a corresponding increase in the funds available to the recipients). They are, in fact, as much a call on the budget as equivalent direct outlays would be, and for this reason have sometimes been described as disguised expenditures. Assistance of this type through the taxation system has been provided mainly by way of income tax concessions which permit firms and individuals to make deductions from their assessable income additional to those authorised under the general provisions of the income tax law.

The amount of revenue forgone in 1972-73 through the main taxation concessions is estimated to have been about $289 million. Details are shown below. (Pay-roll tax rebates under the export incentive scheme in respect of exports in 1970-71 and prior years are included under the heading Manufacturing Industry.)

Most of the relevant concessions in the income tax field may be grouped in three broad categories, namely:

A those allowing the deduction of larger amounts than are authorized under the general provisions of the law (included in this category is the rebate for export market development expenditure, which gives a tax saving additional to the saving resulting from the deductions from income for this expenditure);

B those allowing certain taxpayers to deduct the cost of items of plant over shorter periods than is the case for the general run of taxpayers; and

C those exempting certain classes of income.

The main provisions in each of these classes and the estimated amounts of revenue forgone in 1972-73 are shown in the following table. A miscellany of lesser provisions is not included, because of lack of data on revenue forgone or questions about the extent to which they may properly be regarded as wholly 'Industry Assistance1.

 

D.   EMPLOYMENT CONDITIONS

Expenditure on the Government's manpower and industrial relations policies is expected to total $71.5 million in 1973-74, an increase of $17.6 million on the previous year. An initial provision of $5.0 million is included for adjustment assistance following the 25 per cent reduction in all non-revenue rates of customs tariff. The remaining increase is due mainly to further growth in the activities of the Commonwealth Employment Service and various employment training schemes.

Details are shown in the following table:

Conciliation and Arbitration

Expenditure in 1973-74 is estimated to increase by $0.5 million to $3.1 million, partly as a consequence of the appointment of an additional two Deputy Presidents and six Commissioners to the Conciliation and Arbitration Commission. An additional $0.1 million has been provided to overcome arrears in the publication of Commonwealth Arbitration Reports.

Payment to Stevedoring Industry Authority

This payment represents collections by the Government on behalf of the Authority in respect of man-hour levies imposed on stevedoring employers under the Stevedoring Industry Charge Act 1947-1973. The funds are utilised by the Authority to pay attendance money and leave benefits to waterside workers, and to reimburse employers for pension and redundancy payments. Expenditure in 1973-74 is estimated at $18.5 million, an increase of $0.6 million. Increased levy charges are to apply during 1973-74.

Coal Mining Industry Long Service Leave

Long service leave benefits for coal miners are financed from a trust fund established under the States Grants (Coal Mining Industry Long Service Leave) Act 1949-1968. In States where miners have been awarded long service leave the States reimburse employers the cost of granting this leave. The Australian Government in turn reimburses the States from an excise imposed on the production of coal. Expenditure from the Trust Account in 1973-74 is estimated to be $2.2 million.

Apprenticeship Training

The purpose of the National Apprenticeship Assistance Scheme, introduced in January 1973 as an extension of a Country Apprenticeship Scheme, is to increase the number of apprenticeships available and to improve the standard of training.

Expenditure in 1973-74 is estimated at $5.5 million, an increase of $4.2 million on the previous year, of which $2.5 million is a result of the extended scheme's first full-year of operation. The Government's decision to increase and widen the benefits available under the scheme accounts for the remaining $1 . 7 million of the increase.

Aboriginal Training Schemes

An employment training scheme for Aboriginals who are not established in the workforce is sponsored by the Australian Government. The decision to increase the benefits and broaden the scope of the employment training scheme is estimated to cost an additional $0.2 million in 1973-74. Vocational training courses are also conducted for Aboriginals in the Northern Territory; expansion of these courses is estimated to cost an additional $0.2 million in 1973-74.

Adjustment Assistance for Tariff Reduction

An initial allocation of $5.0 million has been included in the estimates to assist employees displaced as a direct result of the Government's decision to reduce all non-revenue rates of customs tariff by 25 per cent from 19 July 1973.

This assistance will be given through the Commonwealth Employment Service (CES) and other existing services and will include :

(a)   grants to individuals to meet relocation expenses where the CES is able to offer employment at a different location;

(b)   re-training assistance, including guaranteed minimum wages during re-training, payment of training fees and related transport costs and living-away-from-home allowances where necessary; and

(c)   incentives to firms to train or re-train staff rendered redundant as a result of tariff changes.

Other Training Schemes

Funds are provided for a range of training and re-training schemes designed to provide greater employment opportunities for persons in the community who have been disadvantaged in employment. A program has also been developed to encourage a general improvement in training in all fields of industry and commerce.

Expenditure in 1973-74 is estimated to total $6.4 million, an increase of $2.4 million on 1972-73. Additional funds have been provided for the training of persons displaced by redundancy ($0.9 million), for the training of discharged servicemen ($0.8 million), and for the General Employment Retraining Scheme ($0.4 million).

General Administration

Expenditure in 1973-74 for the operating costs of the Department of Labour is estimated at $29.4 million, an increase of $4.2 million over 1972-73 expenditure. Higher staff numbers and salary rates approved in 1972-73 account for $2.2 million of the increase. An additional $0.8 million has been provided to publicise training schemes and services provided by the Commonwealth Employment Service.

E.   OTHER ECONOMIC SERVICES

This residual group covers several economic services which are not readily categorised elsewhere.

Outlays on these various services in each of the past three years and the estimates for 1973-74 are summarised in the following table:

Economic and Trade Regulation

Most of the outlays under this heading relate to the costs of operations of the various authorities listed. The estimate of $1.3 million for 'Other' in 1973-74 includes provision for the Metric Conversion Board and the National Standards Commission.

Recoveries under this heading, which are estimated to increase to $4.3 million in 1973-74, are mainly in the form of fees charged by the Patent, Trade Marks and Designs Offices.

Specialised Activities and General Administrative Services

Increases in wage and salary costs are responsible for most of the increases of both the specialised activities and general administrative services listed in the above table. Recoveries in respect of specialised activities, which are estimated to increase to $8 . 5 million in 1973-74, reflect mainly revenues of the Bureau of Meteorology from specialist services.







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