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Speech and budget debate by I Sinclair

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On 1 July, the Prime Minister spoke to 50,000 farmers who had

come to the tax summit to let the Government know how vital it

was to slash farm costs.

He said: "We will do everything within our power to reduce the

impact of costs upon you, particularly in the fuel area."

But over the next three days, the tax summit the Prime Minister and

Treasurer built as their monument crumbled in ruins.

The Treasurer, who marched up th,e steps of this building with

all the arrogant elegance of one of his famous clocks, was

booted out the front door by the ACTU and his own Prime

Minister - and he hit every step on his way down to the road.

Eight days after the Prime Minister's promise to farmers on

fuel costs, he sent the Minister for Primary Industry north to

give the rural sector the bad news.

In Cairns on 9 July, the Minister spelt it ou t > saying: "That's

all gone by-the-by now."

If the farmers of Australia - the people who produce 40 per

cent of our export income — needed any confirmation of this

Government's cynical, offhand treatment of their very real and

very serious concerns, they got it on Tuesday night.

The Treasurer spelt it out with all the sympathy for one of

the most efficient and productive sectors of Australian

industry that would be expected from a collector of antiques

and Elizabeth Bay real estate. -

The highest-taxing, highest-spending, highest-borrowing

Government in Australia's history was handing out a bit of

charity to those who were paying for its generosity.

Farmers would get a full rebate of the excise on diesel fuel -

from 1 November.

. . . 2

The tariff on grain harvesters would be replaced by a subsidy

for local production - from 1 January.

These decisions, the Treasurer said, would cut farm costs by

$25 million this year and $46 million in a full year.

What a joke! -

It was the Hawke Government which took away the full fuel excise

in the first place, when it indexed the excise 18 months ago.

Since then, it has raked in $55 million from farmers from that


It was the Hawke Government which failed to act on the harvester

tariff - costing farmers an estimated $28 million in 1984-85.

The Government has increased farm costs by over $80 million dollars

through its action in these two areas alone, and now it plans to

hand back or more accurately, not collect a paltry $ 25 million

this year and $46 million next year.

The National Farmers Federation estimates the savings to each

farmer from Tuesday's announcement will average about $147.

But it estimates that the May mini-budget decisions alone will

cost farmers an average of $302 each this financial year.

. . 3 ■ · .

Preliminary and by no means full estimates of the cost to the

rural sector of decisions of this Government since March 1983

have been taken out by the National Party. -

For the farm sector alone, the estimate is that Government

decisions have cost $225 million to the end of last financial

year - or about $1,300 a farmer.

By the end of this financial year, the cost of Government decisions,

allowing for the budget changes, will be over $440 million -

or more than $2,600 a farmer.

That will work out to an average cost impost of $800 per farmer for

each financial year since Labor came to office.

Costs include changes to fuel excise and the diesel rebate,

reduced depreciation allowances, changes to tax averaging, the

harvester tariff, increased export inspection charges, cut in .

rural adjustment, sales taxes on wine and lubricants, and

abolition of tax concessions for clearing and drainage and -

effectively - of fuel freight equalisation.

This financial year, the decision - if retained - to impose an

anti-dumping duty on di-ammonium phosphate fertiliser will

cost farmers an estimated $26.5 million.

This bill to farmers from Labor's policies - $800 a year - is

bitter indeed when it is remembered that the average net

income of Australia's farmers' this year will be only $6,600.

And next year, according to the Bureau of Agricultural Economics,

the real net value of rural production will fall by 22 per cent.

Is it any wonder that 50,000 farmers came to Canberra to

protest against far costs? '

Is it any wonder that the so-called "generosity" of this

Government in the budget was universally condemned by farm

leaders? .

The budget showed that the Prime Minister's promise at the

farm rally on 1 July was as cynical and worthless as virtually

every promise he has made.

• ■ - i ‘ · . - ' " · * '

It showed, perhaps even more seriously, that this Government

has no conception at all of what it is doing to the rural


Farmers understand that their incomes are affected by the downturn

in international commodity markets, and they know the

Government can do relatively little about that. ·

But they also understand that the Government could, at a stroke,

give them a substantial measure of the security they so

desperately need, by cutting their costs.

. . 4

They do not want subsidies - they simply want a fair go.

They deserve it - and they were led to believe they would be

getting it in this budget.

They were betrayed by this Government, as they have been

betrayed by this Government every day since it came to office.

This has not just been a betrayal of Australia's farmers.

It has been a betrayal of the communities in which they live,

and of all those who are dependent on primary production -

the small businesses and those they employ, the men, women and

children who live in Rural Australia.

. .6

It has been a betrayal of the nation, because it is on

our farmers that much of the nation's prosperity ultimately


Costs are the central issue for the farm sector.

There are other aspects of the budget, and the Government's

economic policy, which must also be noted, however.

It is worthwhile noting, for example, that the provision

for rural adjustment in the budget is totally inadequate.

There is no real provision for the help desperately needed

by the sugar industry -- and little provision for the dairy


Funding for meat and livestock marketing is welcome, but

hardly compensates for the increased cost of export


The overall increase in off-budget funding for primary

industry, up $116.8 million, is mainly accounted for by

the delayed repayment to wheatgrowers of $104.6 million,

from their Wheat Finance Fund.


Sadly, the Government does not realise the socio-economic

consequences of the downturn in rural returns.

It is not just the farmer for whom the National Party and

the Coalition is concerned; it is his family and those who

live in the towns associated with rural industry.

In the sugar industry there is a particularly close

relationship between the canegrowers and everyone in the

sugar towns.. -

Our policy was the implementation of a broad-based rural

reconstruction scheme associated with measures of rural

assistance. . .

My Party believes a $240 a tonne floor price for N o .1 pool

sugar for the next three years is essential.

Even the, adequate funds for rural reconstruction designed

to help those who wish to get out of .the industry, as well

as for those who wish to stay, and positive consideration

for the welfare, education and job-training problems of

those in the towns,.are necessary.

The major concern for Rural Australia, however, comes not

from what was in the budget -- but what was not in it.

. . 8

That is the Government's tax plans, to be announced next


The Prime Minister and the Treasurer have both made clear

this Government's commitment to a new capital gains tax,

or death duties, or wealth tax, or whatever other form it

might assume.

These taxes are totally opposed by Rural Australia.

They will be opposed by the National Party.

There should be no doubt about this at all.

Rural Australia - - and the farm sector in particular - -

cannot and will not pay the price for the failure of the

tax summit. '

They cannot and will not accept a tax which breaks down

the family farm, attacks small business, and penalises

those who have worked hard all their lives to build up

the capital needed for any business today.

When Senior Labor Ministers years ago first proposed the

concept, the National Party warned that a capital gains

tax would inevitably mean- the return of the hated death and

gift duties.

We warned that a new capital gains tax would inevitably

have a severe effect on farms and small business.

And that is exactly what is threatened.

As the assets test particularly affects the retired farmer,

so capital gains tax affects the active farmer.

Both are Labor initiatives - - both we resolutely oppose .

The Government claimed at the tax summit that its new capital

gains tax would only have a minimal impact on the -rural

sector. '

According to an independent survey, however, in the case of

a property in western New South Wales bought in 1976 for

$100,000, the capital gains tax payable on the death of

the owner, under Labor's plans, could be as high as $60,000.

We have yet to see the final form of this Government's new

capital gains tax.

It is worth repeating the warning I have made about it

around Australia, however - - a warning which is simple and


The National Party will oppose any new capital gains tax.

. . . 10

Mr Speaker.

As Shadow Defence Minister, I want to refer to the impact

of the Budget on Australia's Defence.

Having a Labor Government in charge of defence is like

having a pilot who gets airsick, a sailor who hates water

and a soldier who is lame.

There is a "Dad's Army" mentality and we are watching a

great rundown of an ability to defend this great country.

Service numbers are contracting while new procurement programs

are stalled on the prospect of the Dibbs and Cooksey Reports.

Only an order for Seahawk helicopters and a commitment to

build two follow-on FFGs at Wi11iamstown dockyard, and a

project definition study for the replacement submarine, have

been put in place by this Government over its two and a half

years, in office.

Project Waler for the development of an Australian designed

and built light armoured vehicle, which would have brought

great stimulus to Australian manufacturing industry and

generated employment, has been scrapped. .

Project Wamira is under threat; an Australian designed

automatic rifle has been rejected for an overseas alternative.

. . 11

Like the Qantas Flight Assistants' uniforms, this

Government seems to prefer to design and buy abroad.

So much for the sincerity of their much-vaunted training

programs to provide job opportunities for Australia's


In policy terms, the Fortress Australia concept of this

Minister and this Government is wrong.

To structure the Australian Defence Force so that it can

only defend Australia after an enemy has landed is to place

all Australians under threat.

The New Zealand action to"bar visits of U.S. naval vessels

has led to a suspension of ANZUS.

As a result, regional defence is less secure.

This Government has thumbed its nose at even assisting to

a limited degree the MX missile testing program of the U.S.

It has rejected participating in research into the Strategic

Defence Initiative.

. .12

Like its Labor counterpart in New Zealand, it has grasped

the straw of the so-called nuclear-free Treaty for

the South Pacific, without consideration of the effect on

our ability to fulfil the obligations of ANZUS in the event

of a future defence threat to Australia.

The government seems to have forgotten that we are an island

nation, and that to defend it and secure our sea lanes, we

need a strong and viable navy.

Our navy today is smaller than 20 years ago.

The three Hawke budgets have resulted in it being cut by

10 percent.

The Navy's planned strength is to fall a further 710 during

the current financial year, to 15,536 personnel.

The reasons are the government's political decision not to

acquire an aircraft carrier, and to scrap the Fleet Air

Arm's fixed wing aviation capability.

New Zealand got the A4 Seahawk aircraft for a song,

China got The Melbourne as scrap metal. !

Australia got nothing.


The Navy is. getting only a small proportion of the

Government's spending on defence equipment and stores

in this budget. .

The Navy's bigger capital items are DDG and DE destroyer

updates costing $97 million, naval destroyer and utility

Seahawk helicopters of $70 million, underway replenishment

ship of $19 million and mine-hunting vessels of $12 million

-- or-one-seventh of total major defence projects of

$1500 million in the budget. '

. . 14

There is no specific mention of the fitting of FFGs mark 1-3

with stabilisers nor their refit to enable them to handle

Sea hawk helicopters.

Without those their AWS capability will be seriously limited.

Our navy is being torpedoed by Labor.

If there was any hope on the horizon it should be the

replacement submarine program but even at this early stage

a cloud hangs over the basis of the Government's determination

of the two. companies preferred for the project definition study.

The Member for Kalgoorlie has properly criticised the Minister

and the Department for the handling of those decisions.

Not only is the question now before the Ombudsman but '

allegations about the adequacy.of the preferred tenderer

must be cleared before the public can be satisfied that the

project should proceed. .

More seriously while everybody acknowledges the submarine

should be nuclear powered or at least that option should be

thoroughly investigated, the Government refuses to consider

that option because of the strength of the views of its

Socialist Left.

. .15

Mr Speaker, the Navy isn’t the only Service to have its

numbers cut -- our Army will have its numbers reduced by

a further 677 this financial year.

The RAAF with the F/A18 now coming into service is in a

healthier state, yet there is no certainty about the -

introduction of Jindalee over-the-horizon radar, nor the

acquisition of airborne early warning aircraft.

Significantly, the Budget allocation for service manpower

costs are meaningless. The Defence Forces Pay Tribunal is

to release its findings within the next few weeks.

Sadly the Services have been left way behind in- pay

comparability With their civilian counterparts and no

redress has been made since Labor's election in March 1983,

except for CPI adjustments.

The Government has set aside $162 million to meet prospective

increases but admits it will be insufficient.

The whole Budget strategy is based on the possibility of

the revaluation of the Australian dollar and,in the defence

vote,on savings this will generate from funds required for

overseas procurement.

That is not a proper basis for Budget programming. .

. . 16

Indeed as John Stone, the former Secretary to the Treasury,

has remarked the windfall profit of the Reserve Bank on overseas

currency dealings is no alternative to cutting spending in an

overall assessment of the level of this Budget deficit.

Funds now set aside are inadequate to redress the imbalance in

pay and allowances required for the Labor Government to meet

its obligations as a good employer.

Since Labor came to power not only have the Services had.their

pay frozen but their superannuation has been eroded with no _

benefit to those who are required to retire before 55 from this

year's Budget easing from $5,000 - $55,000 the lump sum on which

the retirement concessional 15 percent rate of taxation will apply.

Their accommodation remains sub-standard. While additional

funds for housing are welcome, until defence delegates financial

responsibility for repairs and maintenance to Base Commanders

and scraps the costly and ineffective services of the Department

of Housing and Construction and allows sub-standard accommodation

to be sold and funds returned to the defence vote and a free

transfer of votes between Budget items, the problem will not

be redressed.

Nonetheless, the decision to build a further 680 houses is

welcomed but it is just a start.

Mr Speaker. This Budget is in the first year of Labor's new

3 year term.

17/. .

The opportunity for the hard decisions has been passed by.

With a collapse of the tax summit and the total uncertainty

of wage discounting for devaluation it represents but a third '

of this year's financial program.

The failure of that trilogy is far more significant than the

Government's meeting the other trilogy.

It has ducked the decisive leadership needed to give the

nation the new direction it must have if we are to meet the

real challenges of the rest of the decade. -

Those challenges have been spelt out most effectively in

advertisements placed in major newspapers yesterday by the

former Chief Executive of Australian National Industries,

John heard.

He made three major points. .

The first was that we. have been living beyond our means, and

doing so by excessive borrowing. ■

The second - - flowing from the first - - was ikaf Government spending

was out of control. .

The third was the present Government was shackled by the Prices

and Incomes Accord and controlled by the trade union leadership.


Mr Leard's message should be understood by all Australians, because

what he says is true.

What we need n ow, more than we have ever needed before, is a

major new thrust in Australian economic policy.

Once one of the wealthiest nations in the world on a per capita

basis, we have slipped to the "also-rans" - - and we are still

heading downward.

The problems facing Third World countries - - heavy overseas

debt, dependence on overseas sources for major equipment and

technology, dependence on bulk commodities for export income - -

are our problems as well. .

The growth around the world of major trading blocs, each with

immense resources, has left us incredibly isolate and endangered.

It has completely distorted world markets in our major farm

products, while at the same time markets for our mining industry

have been hit as poorer, mineral-rich nations subsidise their

production to gain hard currency for exports and debt repayment.

Our small domestic market limits economy of scale for manufacturing,

and our market alignment, coupled with the effect of domestic

protection on trade with our neighbours, is a severe brake on

competitiveness. . '

Yet we go on paying ourselves more, imposing higher and higher

taxes, and borrowing more and more overseas.

19/ . . .

Inflation this year, even if we acn_ept the Treasurer's assessment

of reaching more than 8 percent , will be more than twice the

rate of our major competitors.

A total of 750,000 Australians, more than 12 per cent of all

taxpayers, will move into higher tax brackets.

Some 500,000 will move into the 46 cent marginal rate - - on top

of another 500,000 who moved into the same bracket last year.

Another 250,000 will move into the 60 cent marginal rate.

Public debt interest of $6.7 billion will amount to almost

10 per cent of total Government spending. .

Ten years ago,.public debt interest was the third smallest of

the major categories of budget outlays.

This year, it will be equal third largest - - as much as we spend

on health, and more than we spend on defence or education.

This year we will spend one third of the value of our total annual

exports on interst and loan repayments.

We are, very plainly, living beyond'our means.

If we do not do something about it, the world will do it for us,

as we learned when the dollar was floated. ’

20/ . . .

We are a small country in a b ig, hard world, and to survive - -

let alone to grow - - we have to compete, compete and compete

again. ;

We must have a new direction.

This demands a whole range of new policy approaches - - in the

economy, in trade, industry, mining and the rural sector,

and in health and education and our attitude towards Government

providing money to answer every community problem.

Above all, it demands that Australians recognise that they

cannot go on increasing their living standards beyond the

capacity of the nation.

If we are to hand on to our children the nation we all want

to see, we must over time reduce real wage levels.

To do that and maintain individual living standards we must

reduce the burden of taxes on the tax payer. To do that and

reduce our public sector debt we must cut Government spending.

There are no easy answers but it must be done and the, GHEP

program which the Treasurer decided to continue to fund in

last May's mini Budget is a good example.

Indeed you will recall he said then that that was the first

instalment. This week's Budget has none the less largely

absorbed the cuts he then claimed to have made y

21/. . .

Of course this Government's financial obligations, to the

socialist left and the constraints of its upion masters

prevent it from taking the decisions that are necessary.

The apparatus of big Government, of interference in the lives

of citizens, of regulation above deregulation, of intervention

and control above freedom of association and right to work

mean it is incapable of opening up the economy and reducing

the size and role of Government, as we must do if we even

hope to move ahead in the rest of this Century and beyond.

Let us not forget what the dispute at Mudginberri is all about

-- the right to work.

The Government is siding with the ACTU and the AMIEU to reduce

the wages of workers under that Northern Territory meat award

because it sees those workers exercising their right to work

being understood by workers elsewhere in Australia.

This Government dithers in impotence and indecision, unable to

do what it knows is right, and unable to give the leadership

the nation must have. ‘

Australians will look back upon this as a wasted budget, a lost

opportunity which will quickly become the curtain-raiser to a

new round of new taxes and new spending, further dissipating

the nation's strength and its hopes.

22/ . . .

The National Party condemns this Government, and I second the

amendment moved yesterday by the Leader of the Opposition.