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Friday, 27 August 1937


Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [11.36].- I lay on the table-

Estimates of Receipts and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, etc., for the year ending 30th June, 1938.

The Budget, 1937-38 - Papers presented by the HonorableR. G. Casey, M.P., onthe occasion of the Budget of 1937-38 - and move -

That the papers be printed.

In introducing the budget for 1937-38 in the House of Representatives to-day the Treasurer, the Honorable R. G. Casey, said that it is not too much to claim that at the present time Australia has reached the highest level of prosperity ever recorded. Based on unemployment percentages reported to the Statistician by trade unions, unemployment has declined from 30 per cent, in the second quarter of 1932 to 9.7 per cent, to-day. On more complete figures which are available for New South Wales and Queensland, it is evident that the position is even better than these percentages indicate. The value of production has increased in the five years by over 40 per cent., and building and construction in the same period have more than quadrupled. The market for Australian primary products has materially improved, the value of our wool clip in 1936-37 being almost double that in 1931-32. "Wheat also has shown nearly as marked an increase. Export prices in 1936-37 show the substantial increase of 20 per cent, over 1935- 36. The extent of the recovery is further illustrated by the fact that in 1936- 37 Australia had a favorable trade balance of nearly £36,000,000. The marked recovery during the period of its office is a source of great satisfaction to the Government, which can reasonably claim to have contributed in no small measure to this achievement by following a sound financial policy.

The improved condition of the country is reflected, also, in the budgetary position of both the Commonwealth and the State Governments. The aggregate deficits of the Commonwealth and the States for the year 1930-31 amounted to £25,390,000, and in 1931-32 to £19,490,000; but in 1936-37 an aggregate surplus of £965,000 was recorded.

Since the assumption of office in December, 1931, by the Lyons Government, the Commonwealth debt has been reduced by £11,019,000 to £386,910,000. During the year a loan of £12,360,000 was converted in London, with a saving in interest and .exchange of £46,000 per annum. . Further loans totalling £11,410,000 will mature on the 1st February, 1938. Two loans of £7,500,000 each were raised in Australia during the year 1936-37, the yield of the first being £3 19s. 4d. per cent., and of the second, £3 19s. Id. per cent, per annum. In the current financial year the Loan Council has decided to limit the borrowing for Sta te and Commonwealth purposes to £16,000,000, of which the Commonwealth's share wall be £2,500,000. The whole of this latter amount will be used for grants to the States for rural debt adjustment.

The national debt sinking fund has played a most important part in connexion with the debt. Since the establishment of the fund in 1923, over £75,000,000 has been provided for the redemption of Commonwealth debt, and over £37,000,000 has been paid to the fund for the redemption of State debts since the State sinking funds were established in 1928. This year £5,580,000 will be provided for State sinking funds, and £4,630,000 for the Commonwealth sinking fund, a total of more than £10,000,000.

The revenue for 1936-37 amounted to £82,807,977, and the expenditure _ to £81,531,419, showing an excess of receipts over expenditure amounting to £1,276,558. Practically the whole of this excess is due to increased income tax receipts on account of the more rapid payment of outstanding arrears. It is proposed that £1,000,000 of these excess receipts shall be set aside for the public works of the Postmaster-General's Department, and that £276,558 shall be applied to the reduction of the accumulated deficit of the Commonwealth, which will then be £15,658,000.

For the year 1937-38, the Government again presents a balanced budget. Since it assumed office in December, 1931, the burden of taxation on the Australian, people has been considerably reduced by this Government. Successive reductions have been made of sales tax, land tax, and income tax, while the entertainments tax has been abolished altogether. In order to illustrate the value of these reductions of taxes, I point out that, had the income tax, sales tax and land tax been continued at the 1931-32 rates, they would have yielded £36,500,000 in the current financial year instead of the £18,200,000 which is shown in the budget. Extensive reductions have also occurred in primage duties and in customs - British preferential - and excise duties on certain commodities. In view of the formidable and inescapable increases of its obligations for the immediate future, the Government regrets that it is unable still further to reduce taxes in this financial year.

The estimated budget results for 1937-38 may be summarized as follows : - Estimated revenue, £85,190,000; estimated expenditure, £85,160,000; estimated excess receipts, £30,000.

It is proposed to increase the rate of invalid and old-age pensions from 19s. to £1 a week, representing a cost of £800,000 in a full financial year. Further increases are due to the normal growth of the number of pensioners, and by the fact that, in this year, there will be 27 pension pay-days instead of the usual 26. In all, invalid and old-age pensions will cost practically £2,000,000 more than last year.

Following the discussions on Empire defence at the Imperial Conference, substantial provision has been made for strengthening our defences. The total amount to be expended in this direction will be £11,531,000, as compared with £S,067,000 in the last financial year. These defence proposals are to be financed as follows: - From revenue, £6,000,000; from defence equipment trust account, £2,656,000; from civil aviation defence account, £375,000; from loan fund, £2,500,000.

For some years it has been the practice to pay as much as possible of excess receipts of the Commonwealth to the defence equipment trust account, and to draw upon this account to assist the budget in respect of defence expenditure in subsequent years. At the close of 1936-37 approximately £3,000,000 was held in the defence trust accounts, and practically the whole of this sum is being committed during the current financial year. The Government has decided to meet the balance of £2,500,000 from loan fund. To this end it is proposed to raise £2,000,000 sterling, that is, £2,500,000 in Australian currency, by means of. Commonwealth treasury-bills from the Commonwealth Bank in London and, at a later date, to fund the shortterm securities from the proceeds of a public loan. This course has been decided on, because, first it is desired to restrict the total raisings of all governments in Australia in 1937-38 to £16,000,000 ; and secondly, a conversion operation of £72,700,000 has to be dealt with in 1938. Moreover, by this means, we shall be able to finance our expenditure in Great Britain for defence equipment without encroaching on our existing London funds.

The total additional provision in this financial year for war pensions and repatriation i3 £212,000. It is proposed to increase the rate of war service pensions from 19s. to £1, involving an additional charge of £22,000 on the budget.

An amount of £100,000 is being provided in respect of public health projects, especially in relation to the health of women and children, whilst grants for

Senator Sir George Pearce.aerial medical services, and for investigating problems of nutrition are also being continued. An additional £25,000 is being provided for the eradication of cattle tick.

Reports on unemployment insurance and health and pensions insurance have been received from Mr. Godfrey H. Ince, Chief Insurance Officer of the British Ministry of Labour, and Sir "Walter Kinnear, Controller of Insurance in the Ministry of Health in Great Britain, respectively. The former report was recently discussed, with representatives of the States, when it was arranged that a committee of officers and actuaries, representing the Commonwealth and States, should further examine certain aspects of unemployment insurance. The matter of health and pensions insurance is now under consideration by the Government. Towards the initial expense of national insurance, £75,000 is included in the budget.

It is proposed to grant superannuation rights, together with the right to furlough for long and meritorious service, to as many members as possible of the staffs of the High Commissioner's office, the War Service Homes and Repatriation Departments, and the Council for Scientific and Industrial Research, who arc, in fact, though not technically, permanent officers. '

The estimates of the PostmasterGeneral's Department for this financial year provide for an increase of the expenditure chargeable to revenue, by about £900,000, and for a corresponding increase of the receipts of that -department.' The Government has carried out a policy of continuous improvement of postal, telegraphic, telephonic and broadcasting services. This is illustrated by the progressive increase of expenditure on new works of the Postmaster-General's Department from £865,000 in 1933-34 to an estimate of £3,250,000 in 1937-38. As I have already said, £1,000,000 of the £3,250,000 will be provided from excess receipts of last year. There has been extensive development in air-mail and passenger services and telephone facilities, particularly in the country, whilst additional broadcasting facilities have also been provided. It is pleasing to note that, in respect of all this work, Australian manu- factures have been used to a far greater extent than in the past.

The sum of £10,000 has been provided i.o meet possible commitments which may arise in 1937-38 in connexion with Pacific shipping services. This matter was discussed at the Imperial Conference, and it is hoped that an agreement will shortly be entered into under which two new ships will replace those at .present operated by the Canadian-Australasian line.

The provision in 1937-38 for scientific and industrial research is £170,000, compared with £138,000 for 1936-37. Excellent work has been done by the council, and, as a result, increasing contributions are being received from industry. Research is being pursued with regard to the blowfly pest, pasture improvement, forestry, fruit preservation, &c, and early in 1938 a fisheries investigation vessel will bo in operation under the guidance of Dr. Thompson, formerly Director of Fisheries in Newfoundland.

The Government has undertaken to provide £334,000, and the New South Wales Government £166,000, as debenture capital for the development of the shale oil industry at Newnes. Towards this amount a first instalment of £100,000 is provided in the present budget. From the £250,000 appropriated under the Petroleum Oil Search Act 1936 assistance has been approved for several companies in the search for flow oil, and the prospects are considered promising.

In accordance with a recommendation of the Royal Commission on Monetary and Banking Systems, the Government proposes to establish a new department of the Commonwealth Bank to provide facilities for fixed and long-term lending, and a bill for the purpose will be introduced this session.

The direct financial assistance rendered to the States will amount this year to £15,565,500, which is £543,000 in excess of the grants made during the previous year. These grants are made up as follows: - Interest and sinking fund under the financial agreement, £9,015,000 ; federal aid roads, £3,750,000; special grants, £2,350,000; other grants, £450,500. The fourth annual report of the Commonwealth Grants Commission recommended that payments for 1937-38 should be: South Australia, £1,200,000; Western Australia, £575,000; and Tasmania, £575,000. It is proposed to ask Parliament to approve of these recommendations.

As the result of the federal aid roads and works agreement authorized by the Commonwealth Parliament at the beginning of the present session, payments to States have been increased, and it is anticipated that in this financial year these payments will be £3,750,000, or £721,000 more than last year. The budget also provides for other grants to the States amounting to £200,000, to provide technical training and skilled employment for youths, £100,000 towards interest and sinking funds in respect of loans for public works, £70,000 for assistance to the metalliferous mining industry, and £80,000 for assistance to forestry.

In view of continued low prices, the sum of £65,000 is provided in the budget for general assistance, scientific research, and publicity in respect of the apple and pear industry. The bounty given in previous years in relation to oranges is also being extended to all citrus fruits, and it is expected that the expenditure involved will be £8,000.

Due to the fertilizers subsidy, which has; been paid since 1932, the use of artificial manures by primary producers, other than wheat-growers, has substantially increased. In order that the subsidy may be kept within reasonable, bounds, it has been decided to limit the payment to the first twenty tons of fertilizers purchased by any individual. The estimated cost this year is £250,000. Recognizing the valuable work that is being done by the Australian Travel Association, the Government proposes to increase the Commonwealth grant to this body from £15,000 to £20,000. The sum of £30,000 will also be made available to the Australian Overseas Trade Publicity Committee for advertising and trade promotion in the United Kingdom, whilst £7,500 will be made available for general exhibition purposes in the United Kingdom.

Debate (on motion by Senator Collings) adjourned.







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