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Tuesday, 17 September 1974
Page: 1140


Senator WRIEDT (Tasmania) (Minister for Agriculture) - I present the following papers:

Expenditure-

Particulars of Proposed Expenditure for the Service of the year ending 30 June 1 975

Particulars of Proposed Provision for certain Expenditure in respect of the year ending 30 June 1 975

Estimates of Receipts and Summary of Estimated Expenditure for the year ending 30 June 1 975

Civil Works Program 1974-75

Government Securities on Issue at 30 June 1974

Payments to or for the States and Local Government Authorities 1974-75

Urban and Regional Development 1974-75

Australia 's External Aid 1 974-75

National Income and Expenditure 1 973-74

National Accounting Estimates of Receipts and Expenditure of Australian Government Authorities

Income Tax Statistics

Taxation Review Committee, Preliminary Report 1 June 1974

Motion (by Senator Wriedt)- by leave- proposed:

That the Senate take note of the papers.

Tonight the Treasurer is delivering in another place his Budget Speech for 1974-75. It is my privilege to outline to the Senate the Budget proposals of the Government.

The Government has twice in less than two years been elected to carry out programs of social reform and progress.

The Budget proposals are designed to advance our programs and to make Australia a fairer society.

THE BUDGET SETTING

Due to the interruption of the normal business of government and Parliament caused by the dissolution of both Houses, the Budget is being presented later than usual.

Furthermore, it has been framed within the context of an economy subjected to exceptional strains. We share with all our major trading partners problems of economic management unparalleled in modern times. Yet it must be emphasised that these problems flow from Australia's basic strength and real prosperity. In the past year, gross domestic product increased in real terms by 5½ per cent. Civilian employment rose by a record 218,000. Incomes rose strongly in both real and dollar terms.

Partly because of this increase in incomes, price increases have been large and widespread.

Until recently, we have experienced severe shortages and delays in the supply of a wide range of goods and materials and a disturbingly high incidence of industrial disputes.

The Government acted decisively to ease the excess pressures on the economy prevalent during most of 1973-74. Firm action was taken through monetary policy to moderate excessive demands and through exchange rate adjustments and tariff reductions to increase supplies.

These actions have achieved their objective. Demand pressures in the private sector have abated in recent months.

Although demand pressures are being contained, powerful cost pressures have been unleashed which threaten further unsettling price increases. In that connection I mention that the Government is exploring a tax penalty mechanism by which wage and salary increases beyond an established norm might be excluded from assessable costs for the assessment of company income tax.

The conventional response to inflation has relied almost entirely on the creation of mass unemployment. Those who advocate such a course in present conditions are unable to say what level of unemployment would markedly reduce inflation. The Government is not prepared deliberately to create a level of 4 or 5 per cent, or perhaps even higher unemployment.

The Government is convinced that the best course is to attack the cost price spiral directly. We are pursuing this course in discussions with the State Governments arising from the recent special conference with Premiers. We have also engaged in discussions with unions and employers, particularly in the context of the Moore Conference. This form of action depends upon widespread and unusual co-operation. To act on unemployment to reduce cost pressures would inhibit that co-operation and could destroy the Government's right to claim it. The Government will not close off its options until the possibilities of co-operation have been given a proper test.

However, decisions taken in the Budget context remain important in this overall strategy. We must maintain control over total demand to prevent excessive demand pressures emerging again. The expansion in the public sector contained in this Budget is designed to take up the slack emerging in the private sector.

Crucial as the fight against inflation is, it cannot be made the sole objective of Government policy. This Government is committed to the program of social reform to improve the position of the less privileged groups in our society and to maintain employment opportunities. We intend to pursue those programs and objectives without significant increase in the public service which will be held to the increase in operative staff of 1 per cent previously announced.

The Government's overriding objective is to get on with our various initiatives in the fields of education, health, social welfare and urban improvement. The relatively subdued conditions in prospect in the private sector provide the first real opportunity we have had to transfer resources to the public sector.

It is against this background that we have budgeted for substantial increases in expenditure on our major programs of reform this year.

OUTLAYS

Total Budget outlays in 1974-75 are estimated at $16,274 million, an increase over actual outlays in 1973-74 of $3,980 million or 32.4 per cent. Details are given in Statement No. 3. 1 now briefly outline the Government's expenditure proposals for 1974-75; additional information will, as appropriate, be provided by the responsible Ministers.

EDUCATION

Education remains one of the Government's highest priorities. Last year, Australian Government expenditure on education almost doubled. For 1974-75, total outlays on education are estimated at $1,535 million, an increase of 78 per cent on 1973-74.

Our expenditure on schools will increase from $234 million in the last financial year to $555 million in 1974-75, an increase of 137 per cent. On universities and colleges of advanced education, expenditure will rise from $524 million to $818 million, a 56 per cent increase.

This Budget provides for important new measures in education to be introduced in 1974-75.

A major new initiative will be undertaken in the field of technical and further education, based on the broad program recommended by the Kangan Committee. Subject to the understanding that the States will not reduce the level of their own activities in technical education, we expect to spend $96.5 million in the States on this program in two years, and have provided $49.1 million for this purpose in 1974-75.

The Government has accepted the recommendations of the Schools Commission that extra funds should be allocated along the lines suggested in the Karmel Report to ensure that the impact of Schools Commission grants, and of grants under earlier programs for school science and library faculties, is not eroded by cost increases. An amount of about $78 million will be available for this purpose during the remainder of the 1974 school year and in the 197S school year; $48.5 million of this is included in the 1974-75 Budget.

Changes to existing schemes of assistance to students at secondary and tertiary levels are estimated to cost an additional $7.2 million in 1974-75. These will permit rates of allowances and means tests to be adjusted to reflect movements in costs.

Details of initiatives in education to be introduced in 1974-75 will be announced by the Minister for Education.

Care and Education of Young Children

The Government has decided to proceed with its full-scale program for the care and education of young children. We propose a fully integrated approach to the needs of childhood, embracing education, health and care services. An amount of $75 million has been provided in the Budget to enable a start to be made on the program by no later than 1 January 1975, and to meet existing commitments.

A Children's Commission will be established to assume responsibility for administering all existing commitments in this area and for developing the new program. Meanwhile, an interim Children's Committee will be set up.

Details of the Government's decisions on the care and education of young children will be the subject of a statement by the Minister Assisting the Prime Minister.

HEALTH

A Development Program for Australian Hospitals

Following consideration of the Hospitals and Health Services Commission report on Hospitals in Australia, tabled in Parliament on 10 April, the Government has decided to implement a five-year program of capital assistance for the provision, expansion and modernisation of public hospital and other health institutional facilities in the States. The amount provided for 1974-75 is $28 million. To meet urgent needs for additional hospitals, arrangements will be made to acquire a site in each of Sydney, Melbourne and Brisbane for the construction of an Australian Government hospital.

Medical and Surgical Aids and Appliances

The Government has recognised the need for assistance in the provision of medical and surgical aids and appliances. It is proposed to widen the assistance given in this field by providing free of charge, to those who need them, stoma appliances and the equipment and supplies needed for home dialysis.

Nursing Homes

The Government is continuing its efforts to improve the position of patients in nursing homes. Nursing home benefits were increased from 1 August at an additional cost in 1974-75 of $24.6 million.

In addition, it is proposed to amend the National Health Act to authorise the Minister to enter into agreements with religious, charitable and other non-profit organisations conducting nursing homes, under which the Government will meet the deficits incurred in running the homes. It is planned to introduce this arrangement in January next. The cost in 1974-75 is estimated at $ 1 .8 million.

The Government has approved a special grant of $1.2 million, on a dollar-for-dollar basis, to Queensland for the erection of Stage 2 of the public nursing home complex at Wynnum. $300,000 has been provided for 1974-75.

Home Nursing

We propose to increase, with effect from 1 October 1974, the existing subsidy to approved organisations providing home nursing services. For organisations established before September 1956, the annual Australian Government payment for each nurse who attracts subsidy will be increased from $4,700 to $6,200. For organisations established after that date, the annual subsidy for each nurse employed will be increased from $2,350 to $3,100. As at present, the Australian Government subsidy to any organisation will not exceed that paid to the organisation by a State. The increase in the subsidy is expected to cost $6 13,000 in 1974-75.

SOCIAL SECURITY AND WELFARE

The Government is pressing on with its commitment to restore Australia to a position of leadership in the provision of welfare services.

Social Security Benefit Rates

Because this year's Budget is late, all social service pensions and benefits have already been increased. Pension rates will be further reviewed in Autumn 1975.

Additional pensions and benefits payable in respect of dependent children, including student children, are to be increased by 50 cents to $5.50 a week.

The means-tested supplementary assistance and supplementary allowance payable to pensioners and beneficiaries who pay rent are to be increased by $1 to $5 a week. The amount of supplementary assistance payable is not to exceed actual rent paid.

Orphans pension is to be increased by $1 to $11 a week.

Australian Assistance Plan

Last year a pilot program provided assistance for 35 Regional Councils for Social Development to establish social planning structures at a regional level. Further impetus is now to be given to the program. Initiating grants will be provided in regions currently not assisted. Administration grants will be increased in the regions already receiving assistance and six more regional councils will be given access to capitation grants to assist local social welfare services.

Dwellings for Pensioners

The States Grants (Dwellings for Aged Pensioners) Act 1969, provided $25 million for nonrepayable interest-free grants to the States over the five years terminating in 1973-74. These grants were for the construction of dwellings to be let to single persons who were receiving an age or Service pension and who were eligible for supplementary assistance. We will now provide an amount of $30 million over the three years from 1974-75, doubling the annual grant to $10 million. The scheme will be widened to embrace the construction of dwellings to be let to single invalid and Class B widow pensioners and single Service pensioners who are permanently unemployable or suffering from tuberculosis.

Home Care for the Aged

It is the Government's intention that the rate of capital subsidy under the Aged Persons Homes Act, now $2 to $1, will be increased to $4 to$l from 1 January 1975.

The personal care subsidy payable to organisations providing personal care services for the aged in approved hostel accommodation will be increased from $ 12 to $ 1 5 a week.

The basic rate of subsidy paid to 'mealsonwheels' services will be increased from 20 cents to 25 cents a meal. The increased subsidy will be payable from 1 October 1974 and will apply to meals delivered since 1 July 1974.

Assistance to the Handicapped

Handicapped children's benefit payable to organisations is to be increased by 50 cents to $3.50 a day.

We propose to introduce a Handicapped Child's Allowance of $10 a week. It is to be payable to parents and guardians in respect of a child under 16 years who is cared for at home and who, because of the severity of the handicap, is in need of constant care and attention.

Structural Adjustment Assistance

An amount of $1 1.8 million is provided in the Budget to assist employees displaced as a direct result of Government decisions designed to bring about significant structural changes in industry that are in the national interest. Within specified limits, income maintenance payments will be made available to individuals affected by these decisions.

Compensation and Rehabilitation

We have endorsed in principle the compensation scheme contained in the Report of the National Committee of Inquiry into Compensation and Rehabilitation in Australia (the Woodhouse Report) and the main enabling legislation will be introduced in the Budget sittings. The Bill will provide for a phased introduction of the scheme and, following detailed examination of the scheme by the Government and others, amendments may be made to the Act before its implementation. The only costs in 1974-75 will be for the payment of staff and consultants to plan the operation of the scheme.

Repatriation Benefits

There will be further substantial increases in Repatriation benefits.

The Special Rate pension, or its equivalent, will be increased by $4.00 a week to $64. 10 during the Budget sittings and will be further increased by $4.00 a week during the Autumn of 1975. The maximum General Rate war pension will be increased by $3.00 a week to $25.00 during the Budget sittings and further increased by $3.00 a week during the Autumn. There will be increases in the Domestic Allowance payable to most war widows and in most other pensions and allowances paid under Repatriation legislation. The full details will be announced by the Minister for Repatriation and Compensation.

In addition, we have decided to introduce some new benefits in the Repatriation field.

Free medical and hospital treatment for any condition will be provided for all Australian exservicemen and women who were interned as prisoners of war. All ex-service personnel, irrespective of whether they had service in a theatre of war, who suffer from malignant cancer, will be provided with any treatment necessary for that condition. These benefits will be introduced during the Budget sittings.

Further benefits will be introduced from the Autumn of 1975. The means test on service pensions will be abolished for those aged 70 to 74 years. A further 25 per cent of all war pension payments will be disregarded as income for service pension means test purposes. Ex-service personnel who had war-time service in the Defence Forces of other countries of the British Commonwealth and who are now residing in Australia, and have done so for at least ten years, will be eligible to apply for service pensions.

Aboriginal Advancement

The Government accorded a high priority to Aboriginal affairs in its Budget allocations in 1973- 74. We propose a further substantial expansion of activity this year. The Budget provides for an increase of $64.9 million in outlays on Aboriginal advancement programs in 1974- 75, to a total of $163.6 million. This provision will ensure that initiatives taken since December 1972 will be consolidated and developed for the benefit of the Aboriginal community.

HOUSING

Welfare Housing

At the Premiers' Conference in June, we agreed to advance $235 million to the States for welfare housing purposes in 1974-75. Taking into account that $25 million of the 1973-74 advances was not spent by the States last year, this would allow for an increase in expenditure this year of $67 million, or 34 per cent. Nevertheless, we stand ready to consult with the States on the provision of additional advances in the light of developments in the housing industry, the availability of resources for housing construction, and the ability of the States to put further funds for welfare housing to productive use. If circumstances warrant, we will be proposing that an increased proportion of advances made to the States under the Housing Agreement be disbursed through the Home Builders' Accounts to assist private home ownership for persons of low and moderate income.

Australian Housing Corporation

The Government proposes to introduce as soon as possible legislation to establish an Australian Housing Corporation to undertake all of those housing functions for which the Australian Government has Constitutional power. This will include direct lending by the Corporation to families for housing. The sum of $25 million is being provided to enable the Corporation to undertake those housing functions which are not provided for under other appropriations. Details will be announced by the Minister for Housing and Construction.

Defence Service Homes

We propose to improve significantly the Defence Service Homes Scheme. Details will be announced by the Minister for Housing and Construction.

The provision for Defence Service Homes will be increased to $ 1 1 5 million, or $ 1 3 million more than the amount provided last year.

URBAN AND REGIONAL DEVELOPMENT

One of the most significant initiatives of this Government has been the major effort to improve the standards of the urban environment in our cities and regions, to establish attractive alternatives to living in the major cities, and to arrest and reverse the decay of the established areas of our cities. This year we will be spending about $390 million on such programs.

Growth Centres

In partnership with the New South Wales and Victorian Governments we have, in the past year, established the Albury-Wodonga Development Corporation. This Budget provides an amount of $40 million for Albury-Wodonga, the major new growth centre initiative in South East Australia. A further $37.4 million has been provided for the establishment of other growth centres including Monarto, Geelong and Bathurst-Orange.

Land Commissions

Last year we made a major commitment towards the establishment of Land Commissions designed to provide Australian families with land at fair prices. Subsequently, the first Land Commission was established in South Australia. The Victorian, New South Wales and Tasmanian Governments have accepted the principles of this program. For 1974-75, we are providing $54.5 million for the purchase and development of land in the States.

Area Improvement

Pilot schemes of area improvement have been commenced in the western sectors of Sydney and Melbourne. In addition, assistance to increase the standards of services available in 11 new regions will be commenced during 1974-75. An amount of $14.1 million has been provided for this program.

Urban Rehabilitation

An amount of $17.5 million has been spent on the purchase of 47 acres of residential land at Glebe, New South Wales, and a further $1 million has been provided to commence the rehabilitation of that area and to improve and increase its housing stock.

Sewerage

During 1973-74 we commenced a program of assistance to the States to eliminate the backlog of sewerage services. That program will be accelerated this year and the Budget provides an amount of $ 105 million.

Last year the program was confined to the major cities. This year we are expanding it to cover provincial cities in the population range 20,000 to 60,000.

CULTURE AND RECREATION

This Budget provides for the consolidation of the progress made last year towards meeting a wide range of cultural and recreational needs.

Assistance for the Arts

The Budget provision for programs of the Australian Council for the Arts will be increased by $6 million to $20 million. In addition, $637,000 is provided for payments to authors and publishers under the Public Lending Right Scheme.

An amount of $2.8 million is provided for The Film and Television School, reflecting the commencement, in 1975, of the School's full-time operation.

Broadcasting Services

An amount of $98 million, or $ 16 million more than in 1973-74, has been provided for operational expenditure by the Australian Broadcasting Commission. A further $14 million has been provided for expenditure on capital equipment, mainly that required for the introduction of colour television.

International Women's Year 1975 has been designated by the United Nations as International Women's Year. The Government has allocated $2 million for relevant activities during 1974-75 by both Government departments and nongovernmental organisations.

Australian Library Based Information Systems

The Government has agreed to the allocation of an additional $1,025,000 over the next two financial years to enable the National Library to undertake a program of extensive consultations and studies on the possible development of an Australian Library Based Information System.

National Estate

There has been in the past an undue emphasis on the concept of uncontrolled development; this has left much to do in identifying, conserving and enhancing the National Estate. The Budget provides an amount of $8 million for grants to the States and to National Trusts, and for expenditure in the Territories, ' on the advice of an Interim Advisory Committee on the National Estate.

Nature Conservation

Provision is being made for expenditure of $381,000 to commence a National Parks and Wildlife Research Program, including the commencement of an ecological survey of Australia and of flora and fauna research and surveys. $9 million will be provided to assist the States in the acquisition of land for nature conservation purposes.

Recreation, Sport and Leisure

The Government will expand its program of assistance to facilitate and encourage beneficial leisure-time activities. These new measures will encourage participation in physical recreation, increase assistance for sport and assist other forms of recreation activities. Expenditure on sport, youth and recreation activities is expected to reach $2.5 million in 1974-75.

The Budget provides $4.5 million for expenditure during 1974-75 on community leisure facilities.

DEFENCE

The amalgamation of the former Defence and Service Departments has enabled the appropriations this year for the three Armed Services to be brought together under a single Department of Defence. The provision for defence outlays in 1974-75, including defence-related activities of the Department of Manufacturing Industry and other departments, is $ 1,498.7 million compared with actual outlays of $1,334.1 million in 1973-74. This provision for defence purposes enables the Government to continue its policy of maintaining Defence Forces which, in conformity with the present strategic outlook, sustain a proper level of defence capability and potential for future expansion.

The Government is proceeding with the four new major equipment projects for the Armed Forces announced in April this year, with a total commitment of some $330 million to be spread mainly over the next eight years. These projects are: eight Long Range Maritime Patrol aircraft for the RAAF, fifty-three modern medium tanks and forty-five Fire Support Vehicles for the Army, and two new destroyers for the RAN. In addition, an extensive program for the refitting and modernisation of RAN surface ships and submarines is under way. Meanwhile, production is proceeding against the orders of previous years; this involves substantial expenditure on items such as two additional Oberon submarines and ten Westland Sea King helicopters.

New budgetary arrangements for providing financial assistance to Papua New Guinea in respect of defence are being introduced with effect from 1 December 1974. An amount of $12.5 million is being provided for defence cooperation with, and defence financial assistance to, Papua New Guinea from that date. Estimated expenditure on defence in Papua New Guinea this year, prior to 1 December, is $ 10.2 million.

Expenditure on continuing defence cooperation with a number of other friendly countries in the region of immediate strategic interest to Australia is estimated at $ 12 million.

The 1974-75 Defence Program provides for reductions in civilian support manpower additional to those achieved in 1973-74. These further reductions are made possible by the rationalisation of activities.

It is intended that legislation will be brought down later this year to enable the reorganisation of the Department of Defence to be put into full effect.

The Minister for Defence will be making a more detailed statement on defence matters at a later time.

ECONOMIC SERVICES

I turn now to the area of economic services, including assistance to industry and the community generally.

TRANSPORT AND COMMUNICATION

Post Office

The amount to be provided from the Budget to help finance the Post Office's capital program is $385 million, the same as in 1973-74. This is in accordance with the Prime Minister's announcement at the Premiers' Conference on 7 June 1974. The remaining finance for the capital program will come from internal resources.

As the Prime Minister also announced at the Premiers' Conference, it is proposed to increase Post Office charges substantially. This is necessary to provide additional revenue in 1974-75 and to avoid substantial losses on the provision of Post Office services. The Government therefore proposes to introduce legislation to give effect, from 1 October 1974, to increases in postal and telecommunication charges similar to those rejected by the Senate in July. However, because of the action in the Senate to delay the introduction of the higher charges, and the consequential loss of revenue, it has been necessary to review some of the increases previously proposed. The basic postage rate will rise to 10 cents, instead of the 9 cents that would have been sufficient if the Senate had permitted introduction of the higher charges from 1 August. The business telephone rental will be increased to $85 a year, instead of $75 as proposed earlier.

Further details will be announced by the PostmasterGeneral.

Civil Aviation

In accordance with the policy announced last year of recovering 80 per cent of the cost of airport and airways facilities by 1977-78, it is proposed to increase air navigation charges from 1 December 1974 by 15 per cent, the maximum permissible under the Airlines Agreement negotiated with the two major domestic airlines last October. Charges to general aviation will be increased by an additional 50 per cent, but the rebate for aircraft not based on government aerodromes will be increased from 33W per cent to 50 per cent. The additional revenue in 1974-75 is estimated at $3.9 million.

The Department of Transport provides a wide variety of services to the aviation industry for which little or no charge is made. The Government sees no reason why these costs should not also be recovered. Accordingly, we propose that charges for these services should be introduced in 1974-75 and increased progressively so as to achieve full recovery by 1976-77.

Within the framework of the cost recovery policy, the Government has decided to proceed in 1974-75 with the construction of a new international terminal costing $4.2 million at Brisbane airport for completion in 1975, a new terminal for Hobart estimated to cost $1.3 million and extensions to the Sydney international terminal at a cost of $2.7 million.

Roads

Following the expiry of the Commonwealth Aid Roads Act 1969, the Australian Government intends to provide $1,126 million to the States for roads purposes over the next three years.

It is intended that a total of $350 million will be made available in 1974-75.

Rail Transport

The Government recognises the importance of railways in our national transport system. Recently agreement was reached with the South Australian Government for construction of a standard gauge line between Adelaide and Crystal Brook, financed by means of grants and loans to South Australia. Expenditure this year is estimated at $900,000. Agreement has also been reached for the construction by Commonwealth Railways of a standard gauge line that will provide a secure all-weather link between Tarcoola and Alice Springs. Expenditure this year is estimated at $2 million.

In recognition of the costs and problems caused by inadequate railway rolling stock, the Government will be implementing a purchase program by Commonwealth Railways for modern high-performance bogie wagons suitable for inter-system use. These wagons will be available for lease by State railway systems at an agreed rate and will, to some extent, overcome recent shortages of rolling stock experienced by the transport industry. The acquisition program provides for 500 wagons to be ordered this year and 800 next year.

At the June Premiers' Conference the Prime Minister said that we would be looking to those of our business enterprises which are not paying their way- that is, whose losses are being imposed on the taxpayer- to lift their charges. Accordingly, some increases in Commonwealth Railways passenger fares and freight rate have been made and a thorough examination of the fare and freight rate structure is being undertaken.

Urban Public Transport

As part of our program to assist in the upgrading of urban public transport, we will provide almost $28 million towards the cost of new projects in 1974-75. The States will also receive about $39 million in 1974-75 towards the costs of projects approved in 1973-74. A total of $67 million is therefore included in the Budget, out of a total of $138 million which the Government has so far agreed to provide under this program. The Australian Government has made an offer to the New South Wales Government to construct and operate a railway radiating from Parramatta in the western suburbs of Sydney. The New South Wales Government has not yet accepted this offer, but provision has been made in the Budget for an amount of $3.5 million to allow the project to proceed as soon as it does so.

Shipping and Harbours

As announced by the Prime Minister, the Australian Government is negotiating with the New South Wales Government for the construction of a large new graving dock at Newcastle. A provision of $3.75 million is being made to cover estimated expenditure in 1974-75.

The Government's policy to increase the share of the nation's trade carried in Australian flag vessels entails a large capital expenditure program for the Australian National Line. A Budget provision of $54.7 million is being made this year for the ANL compared with $7 million last year.

Pipeline Authority

An amount of $75 million has been provided for advances to the Pipeline Authority for expenditure on the Moomba-Sydney natural gas pipeline and spur pipelines.

WATER SUPPLY

We are making a start on a program of financial assistance towards the provision of urban water supplies in Adelaide and North West Tasmania; this year the Budget provides $4.4 million to South Australia for the initial phase of a program of construction of water treatment plants in Adelaide. No payments will be required for the North West Tasmania scheme in 1974-75.

INDUSTRY ASSISTANCE AND DEVELOPMENT

Assistance for Agricultural and Pastoral Industries

As I announced recently, the Government has approved the operation by the Australian Wool Corporation during the 1974-75 season of a minimum reserve price equivalent to 250 cents per kilo clean for 2 1 micron wool. The Government is prepared to guarantee repayment of amounts borrowed by the Corporation to finance these operations and the 'pot-holing' activities the Corporation will continue to carry on when the market is above the floor.

The aim of the new arrangement is to provide firm support to the market and give greater confidence to both wool growers and overseas buyers.

The Government has provided in the Budget for an advance to the Corporation of the $13 million available in the Corporation's Working Capital Trust Fund.

The Treasurer will also shortly be introducing legislation to appropriate funds to enable him to make loans in addition to those provided for in the Budget to the Corporation as required.

The Budget also reflects the arrangements made for an increase in the levy on growers' returns from sales of wool during 1974-75 to meet any losses from the operation of the floor price scheme. This additional amount, estimated at $44.7 million, will be collected and paid to the Corporation's Market Support Fund. If no losses are incurred, the contribution will be used for building up reserves.

In accordance with the present Wheat Industry Stabilisation Scheme, and as a result of buoyant export prices, it is estimated that wheat growers will contribute an amount of $39 million to the Stabilisation Fund in 1974-75 in respect of the 1973-74 pool.

In accordance with the decision last year to phase out the bounty on butter and cheese production, an amount of $9 million is being provided for the bounty in 1974-75, compared with $18 million in 1973-74. However, increased funds are being provided for dairy industry adjustment through the broadened Marginal Dairy Farms Reconstruction Scheme. The estimated cost in 1974-75 is $11.5 million, as against $1.1 million last year.

The appropriation for the Rural Reconstruction Scheme in 1974-75 is $30 million. In addition, the fruitgrowing reconstruction scheme will be extended to 31 December 1975 and a provision of $1.5 million is made for that purpose.

An amount of $2.6 million is being provided for an apple export guarantee scheme for the 1974 season. This follows agreement with the States of Tasmania, Western Australia and Queensland that the Australian Government will meet half the costs of underwriting the returns on apples exported "at risk" during 1974 to the United Kingdom and Europe.

With the expiry of the Phosphate Fertilizers Bounty Act on 3 1 December 1974 the cost of the bounty in 1974-75 will fall to an estimated $33 million, compared with expenditure of $67 million in 1973-74.

Subject to the agreement of the States of New South Wales, Victoria, Queensland and South Australia, it is proposed to set up an Australian Plague Locust Commission to combat outbreaks of this pest. An amount of $250,000 is being provided in 1974-75 as the Australian Government's proposed 50 per cent share of the costs of establishing the Commission.

The Government has decided to provide a grant of $3 million towards the cost of a weir at Clare on the Burdekin River; $300,000 will be provided in 1974-75. A grant of up to $120,000 will be provided for restoration of damaged levees along the Proserpine River.

The Government has decided to extend its assistance to the Bundaberg Irrigation Project by a grant of $4.4 million; $2 million will be provided for the project in 1974-75.

We propose to provide financial assistance to the States for a two-year Water Quality Assessment Program costing $808,000 to complement the existing program of surface and underground water measurement. The Budget provides $332,000 for this program in 1 974-75.

The Government proposes to assist the States with a long-term program of soil conservation. An interim two-year program of financial assistance will be commenced this year. Grants totalling $2.5 million will be provided, of which $500,000 will be made available in 1974-75.

Mining Industry

The Parliament has now passed the Petroleum and Minerals Authority Act, and the Budget provides $50 million for the Authority's proposed activities in 1974-75.

As announced last year, the petroleum search subsidy scheme expired on 30 June 1974. An amount of $6 million is provided in the Budget for payments still to be made in respect of approved exploration programs completed before that date.

Manufacturing Industry

The Budget provides $ 1 5 million for payments this year under the existing Industrial Research and Development Grants Scheme. As announced in last year's Budget Speech, a review of the existing scheme is being made.

An initial provision of $10 million is being made for assistance to firms by the proposed Structural Adjustment Board under the Government's scheme of adjustment assistance for firms affected by Government action to bring about desirable structural change.

Tourist Industry

The Government will widen the criteria under which grants may be given for the development of tourist attractions. The Budget provides $2.25 million for grants under the extended scheme.

LABOUR AND EMPLOYMENT

$17.8 million has been provided for the National Employment and Training System in 1974-75. There will be an increase of $8.8 million in Government support for apprenticeship training this year. Details will be announced later by the Minister for Labor and Immigration.

GENERAL PUBLIC SERVICES

I turn now to the area of General Public Services.

Legal Aid

In furtherance of its policy on legal aid, the Government has established the Australian Legal Aid Office. The establishment of the Office is a major step towards the Government's objective of ensuring that legal aid is readily and equally available to all citizens. Australian Legal Aid Offices are already operating in the capital cities and certain regional centres, and more will be opened during 1974-75. Meanwhile, the program of grants to supplement existing legal aid schemes will be continued in 1974-75. Total expenditure on legal aid in 1974-75, including for Aboriginals, is estimated at $ 12.4 million.

FOREIGN AFFAIRS AND OVERSEAS AID

The Government is concerned about the plight of needy people in less developed countries overseasincluding, of course, Papua New Guinea for which we continue to have special responsibilities.

A total of $341.3 million has been provided for expenditure on external economic aid during the current financial year. This is $81 million or 31 per cent greater than the comparable figure for 1973-74. Details are set out in the white paper on External Aid issued as one of the Budget documents.

Notwithstanding the adverse effects which higher oil prices are having on our own balanceofpayments position, the Government has allocated $40 million for expenditure on purposes related to the proposed United Nations Special Program of assistance to developing countries which have been seriously affected by the recent sharp increases in oil prices and related international developments. This assistance will take the form of grants and will be additional to the significant increases provided for in Australia's other on-going aid activities.

STATE LOAN COUNCIL PROGRAMS

In June, the Government supported an increase in the States' Loan Council programs of 10 per cent. The Government has now decided to support a further increase of 10 per cent. As a result, the States will receive an addition of $92.5 million to their programs, of which $29.7 million will be in the form of interest-free capital grants. These programs for 1974-75 will now total $1,027.4 million.

RECEIPTS

At existing rates of taxation and charges, receipts in 1974-75 are estimated to increase by $3,894 million to $ 1 5,896 million.

I deal first with those measures which will add to revenue.

Wireless Telegraphy Fees

The licence fees for radio communication services licensed under the Wireless Telegraphy Act have remained unchanged since 1970. The existing licence fees of $10 per annum for Land and Fixed Stations, and $6 per annum for Receiving Stations and Mobile and Amateur Stations, will be doubled.

Passport Fees

The fee for issuing a passport has been unchanged since 1966. The present fee of $4 is well below the cost of issuing a passport and it is proposed to increase it to $ 10.

Liquefied Petroleum Gas

The Budget Speech last year said that the question of levying a tax on liquefied petroleum gas was being put under study. An interdepartmental committee has now reported to the Government on all considerations, including environmental considerations, relevant to the taxation of liquefied petroleum gas. On the basis of that report the Government has decided to introduce a tax on liquefied petroleum gas used in propelling road vehicles, but not on gas used for other purposes. The rate of tax will be set initially at 2 cents a litre, which is about 40 per cent of the present rate of duty on motor spirit. Should there be any increase in the rate of duty on motor spirit in future, it is proposed that the tax on liquefied petroleum gas will be increased by an amount equivalent to one-half of that increase. It is not proposed to review this basis for setting the relative rate of tax on liquefied petroleum gas for at least five years and the industry can, therefore, plan on that basis.

Pay-roll Tax

Pay-roll tax in the Australian Capital Territory and the Northern Territory will be increased by one-half of one per cent, to 5 per cent, on wages payable on or after 1 December 1974. This will bring the rate into line with that imposed by the States since 1 September.

Life Insurance Companies

The deduction allowed to life insurance companies under section 115 of the Income Tax Assessment Act will be reduced from 2 per cent of calculated liabilities to 1 per cent in respect of income year 1974-75. This is a further step towards ensuring that life insurance transactions, looked at in their totality, bear a fairer share of overall taxation.

Private Company Rates

As announced in last year's Budget Speech, there will be a further increase in the rate of company tax on private companies to equate it with the public company rate of 47 Vi per cent in relation to income of the 1973-74 income year.

Taxation of Income from Mining

Several amendments are proposed to the income tax law affecting enterprises engaged in prospecting and mining other than for gold. At present both general and petroleum mining enterprises are able to defer payment of tax for long periods under provisions for the allowance of immediate or accelerated deductions for capital expenditures, including anticipated expenditures. As a result, many highly profitable companies have paid relatively little tax over an extended period.

Other provisions exempt from tax 20 per cent of income derived from production of certain minerals, including bauxite, copper, nickel and beach sands. There is no justification for this exemption and it will be withdrawn as from 1 July 1974.

Deductions will not in future be allowable for capital expenditure incurred on company formation and capital raising. Capital expenditure on the development of a mine or well, on the provision of community facilities adjacent to a mine or well, or on the purchase of mining rights or information will be deductible henceforth over the estimated life of the mine or well. Where the estimated life is longer than 25 years the allowance will be one twenty-fifth of the undeducted capital expenditure. Capital expenditure on facilities for the transport of minerals will be deductible for income tax purposes over 20 years instead of 10 years. However, in relation to any of those expenditures to be made by 30 June 1976 under contracts already entered into, deductions will continue to be allowable under the present provisions of the law.

Exploration expenditure incurred by general mining companies in 1974-75 and subsequent income years will be allowable as immediate deductions up to the level of income derived in any year from general mining and associated activities in the same way as petroleum prospecting and mining companies are allowed immediate deductions against income from petroleum for similar expenses. Prospecting and other activities carried out by general mining companies on the continental shelf will be regarded as having been carried out in Australia, consistent with the taxation treatment of petroleum operations carried on at off-shore locations.

Fringe Benefits

In practice, it has proved difficult to enforce general provisions of the income tax law on the value of some benefits given to employees in addition to their remuneration. Accordingly, amendments to ensure that certain fringe benefits are properly subject to income tax are proposed to apply as from the 1974-75 income year.

Deductions will cease to be allowable for expenditures on club dues, yachts and other boats, etc. The minimum assessable value to a taxpayer of the use of a motor vehicle provided by his employer will be determined under a formula to be prescribed in the law. The value for income tax purposes of benefits received by employees under stock option and share purchase schemes entered into after today will be ascertained as at the time of exercise of the options or the transfer of the shares.

Concessional Deduction for Education Expenses

The Australian Government's programs involve substantial increases in direct expenditures on education and there is no longer a case for providing substantial indirect assistance through the taxation system. Accordingly, the amount deductible against 1974-75 income for education or self-education expenses will be reduced from $400 to $ 1 50 for any one student.

Surcharge on Property Income

The Government considers that income which an individual receives from property- that is, unearned income- should bear more tax than income from personal exertion. The Australian taxation system did, in fact, tax unearned income at higher rates than income from personal exertion from 1915 to 1953 and a number of other countries tax unearned income at special rates.

A surcharge will therefore be imposed on property income received by individuals in 1 974-75. The surcharge will be 10 per cent of the tax on property income included in the taxable income. This tax will be calculated by applying to property income the average rate payable on total taxable income under the ordinary rate schedule. The surcharge will be reflected in provisional tax for 1974-75.

Capital Gains Tax

The Treasurer announced on 23 July 1 974 that we would introduce a capital gains tax. Capacity to pay tax is enhanced by capital gains as well as increased income. It has therefore been unfair that income has borne full tax while capital gains have borne none. Taxpayers have also been able to manipulate their transactions so as to substitute capital gains for income and thereby avoid taxation.

The new tax will apply to capital gains realised after today. However, in relation to property already held, the tax will fall only on gains accruing after today. Today's values will be taken as one basis of calculation of those gains, but where today's values are below the cost of acquiring property, the new tax will not apply unless realisation value exceeds that cost. At the taxpayer's option, however, gains accruing after today will be the proportion of total gains that, on a time basis, is related to the period of ownership of assets after today.

Capital gains will include gains from the disposal of assets, capital sums otherwise derived from assets, foreign exchange gains, and gains from the purchase of debentures by their issuer. A disposal will be deemed to occur in cases extending beyond sales and exchanges, and will include compulsory acquisitions, losses or destruction of property, creation of a trust, gifts, transfers on death- in broad terms, any passing of property or an interest in property from one person to another will be included. Capital losses will be deductible against capital gains, but not against income, and for the purpose of deductibility capital losses will be permitted unlimited carry-forward during lifetime and a three year carry-back on deemed disposal at death.

The new tax will not apply to any amount that qualifies as income for income tax purposes. Particular examples are profits from the sale of property which are subject to income tax under sections 25, 26 (a) and 26AAA of the Income Tax Assessment Act.

Gains on sale of a taxpayer's principal residence will be exempt from the new tax and there will be other exemptions and reliefs.

Half of the capital gains realised by an individual in a year will be included in assessable income and taxed at income tax rates. That is, the rate of the capital gains tax levied on individuals will be equivalent to not more than one-half of the marginal tax rate which would have applied had the gain been taxed as income. The gains of companies will bear tax at a rate equal to half the maximum marginal rate of tax on individuals, namely 33Vi per cent.

It is proposed, however, that full income tax rates, whether for companies or individuals, should apply to one category of capital gainsnamely that part of gains realised on the sale of land which reflects actual or potential change in use. Gains of this kind accrue from community decisions and the benefits of such decisions should accrue to the community. This aspect of the capital gains tax will have a significant impact in controlling land speculation.

These are the key features. There are many complex technicalities involved and extensive anti-avoidance provisions will be required. For these reasons it will not be practicable to introduce legislation before the Autumn sittings. Meanwhile, an explanatory paper is being circulated giving a more detailed but still broad outline of what is proposed.

I come now to the Government's proposed tax concessions.

Concessional Deductions for Dependants Residing Overseas

As announced in the Policy Speech, the income tax law will be amended to enable Australian residents to claim deductions in 1974-75 and subsequent income years for the maintenance of dependants who are not residing in Australia.

Depreciation on Child Care Facilities

As also announced in the Policy Speech, the income tax law will be amended to provide specifically for depreciation deductions in 1974-75 and subsequent income years for capital expenditure by employers on the provision of child care facilities for children of their employees.

Estate Duty

Two amendments will also be made to the estate duty law to give effect to undertakings in the Policy Speech. We shall set up a board to hear applications for release from payment of duty in cases of serious hardship, to be composed in the same way as the existing boards that consider similar matters relating to income tax and pay-roll tax.

The other amendment will exempt from duty, along lines indicated in the Policy Speech, an interest in a principal matrimonial home that passes to a surviving spouse. Before calculating the statutory exemption from duty the unencumbered value of such an interest up to $35,000 will be excluded from the value of the estate. Where the unencumbered value is more than $35,000 the amount excluded will be $35,000 less $7 for every $10 in excess of $35,000. The amendment will apply to dutiable estates resulting from deaths since 29 April 1974 of persons domiciled in Australia.

Home Mortgage Interest

The Government's scheme of income tax deductions for home mortgage interest has already been outlined. The legislation will be introduced during the present sitting of Parliament and will apply to interest payments since 1 July 1974.

I come now to the major new taxation concessions proposed by the Government. In aggregate they amount to $500 million in value in a full year.

Broadcast Listeners' and Television Viewers' Licence Fees

First, I announced that the Government has decided to abolish broadcast listeners' and television viewers' licence fees. The National Broadcasting and Television Service is a service provided to the community as a whole, and the Government believes that the cost of the service should therefore be met out of general taxation revenues rather than through a licence feewhich, being a poll tax, bears relatively more heavily on the less affluent.

Licences which become due for renewal on or after tomorrow, 18 September 1974, need not be renewed.

There will be a full-year saving to listeners and viewers of $71 million.

Personal Income Tax

A revised tax rate scale will apply to 1974-75 incomes of individuals. Compared with the present scale, reductions in tax will apply to taxable incomes up to nearly $10,500 with slight increases above that. The largest reduction will be about $100 a year at a taxable income of $6,000. Further details are given in a separate statement. The revised scale will be reflected in PA YE deductions as from I November 1974.

In addition to the reductions in tax on low incomes in general under the new rate scale, we see a particular need for tax relief to low income families. A special rebate of tax will be introduced for that purpose. If a taxpayer's saving of tax at ordinary rates from his dependants maintenance deductions would be less than 40 per cent of the amount of those deductions, a rebate of tax will be given to bring the tax saving up to 40 per cent or up to the tax otherwise payable if that is less. In some cases the rebate will extinguish tax altogether. Where this does not happen, it will be greater the lower the income of the taxpayer and the larger his dependants deductions. Taxpayers who would already be saving 40 per cent or more of their dependants deductions will not benefit.

The rebate will be reflected in PA YE deductions as from 1 November 1974. A separate statement explains it further.

The total cost to revenue of the restructuring of the rate scale and the special rebate for low income families is of the order of $430 million on a full-year basis.

The combined effect of these two measures will be to cut dramatically the tax payable by those on lower incomes with dependants. For example, a taxpayer with a dependant spouse and two dependant children and with average other deductions earning $70 a week paid $213 in tax on 1973-74 income; on 1974-75 income no tax will be payable. If he earns $90 per week the tax payable will be cut by more than half, from $389 per annum to $190. At $120 a week the gains remain significant, tax payable falling from $739 per annum to $577.

Taken together, our tax measures constitute major reforms. They will make the tax system fairer and more equitable. The great majority of wage and salary earners and especially lowincome single-income families, will pay less tax as a result.

Revenue Totals

The cost to revenue of the restructuring of the income tax rate scale, the special rebate for low income families and the abolition of broadcast listeners' and television viewers' licence fees is, as I have said, about $500 million on a full-year basis. Some part of that cost will reflect itself in refunds of personal income tax in early 1 975-76.

The net cost to revenue of the general revenue measures I have announced- that is, excluding the proceeds from the proposed increase in the wool levy- is about $237 million in 1974-75. Details, including the revenue estimates for each of the separate decisions, are given in Statement No. 4.

After allowance for the decisions we have taken, it is estimated that receipts will be $ 15,704 million in 1974-75. This would be an increase of $3,702 million, or 30.8 per cent, over the 1973-74 level.

BUDGET OUTCOME

I now summarise the Budget aggregates.

Budget outlays are estimated to increase by $3,980 million, or 32.4 per cent, to $16,274 million in 1 974-75. Budget receipts are estimated to rise by $3,702 million, or 30.8 per cent, to $15,704 million.

The estimated deficit is thus $570 million but in respect of the domestic balance there is an estimated domestic surplus of $23 million. Those estimates compare with the deficit of $293 million and the domestic surplus of $2 1 1 million in 1973-74.

CONCLUSION

The keynote of this Budget is social progress. We are looking to create a fairer and better Australia.

The year ahead will be a difficult one. The world is beset by severe economic problems. Australia cannot insulate itself from them.

The Budget, together with our other policies, is designed to make the best of things as they are in the world today- to maintain employment opportunities and to protect those who most need protection from the ravages of inflation. At the same time we are looking to the longerterm to the way Australia develops as a nation in the decades ahead. The problems immediately ahead have to be dealt with but in doing so this Government will remain steadfast in implementing its programs.

Debate (on motion by Senator Withers) adjourned.







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