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The Budget



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TREASURER

NQ e i

EMBARGO

ADDRESS BY THE TREASURER, THE RT, HON. P H IL L IP LYNCH, M .P .

McMilla n electorate dinner

FRIDAY 19 AUGUST, 1977

I AM DELIGHTED TO HAVE THE OPPORTUNITY TO ADDRESS T H IS GATHERING ORGANISED

BY THE McMILLAN e l e c t o r a t e COMMITTEE AND THE M cMILLAN f in a n c e c o m m it t e e o f

THE LIBERAL PARTY. ' . . ' ' " '

AT THE OUTSETi I WOULD L IK E TO MAKE SPECIAL MENTION OF BARRY SIMON WHO

IN V ITE D ME HERE TO SPEAK TO YOU T H IS EVENING.

BARRY, AS FORMER MAYOR OF THE C IT Y OF BERWICK AND MEMBER FOR McMILLAN SINCE ,

THE LAST FEDERAL E LE C TIO N , HAS PLAYED A KEY ROLE IN PROMOTING THE DEVELOPMENT

OF T H IS SOUTH-EAST REGION OF V IC T O R IA .

IN FEDERAL PARLIAMENT HE HAS BEEN ACTIVE AND ARTICULATE IN REPRESENTING THE

INTERESTS OF H IS ELECTORATE AS WELL AS MAKING A VALUABLE CONTRIBUTION TO

IMPORTANT NATIONAL ISSUES.

I TURN NOW TO THE 1 9 7 7 /7 8 BUDGET, - A BUDGET W HICH, ONCE A G A IN , IS WIDELY

ACKNOWLEDGED AS A SOUND AND RESPONSIBLE APPROACH TO THE N A TIO N 'S ECONOMIC

PROBLEMS.

F IR S T , I WANT TO SPEAK BRIEFLY ON THE OVERALL BUDGET STRATEGY.

T H IS YEAR'S BUDGET W ILL G IVE SUBSTANTIAL IMPETUS TO RECOVERY W IT H IN THE

ECONOMY. \

THE ECONOMIC FRAMEWORK SET FOR 1 9 7 7 /7 8 PROVIDES GROUNDS FOR O PTIM ISM AND A

BASIS FOR GROWING CONFIDENCE. . .

WE H A V E i AS WE S A I D WE WOULD, S U B S T A N T IA L L Y REDUCED t H E D E F I C I T FOR T H I S Y E A R .

AG AIN, IN L IN E W ITH OUR COMMITMENT, WE HAVE CARVED WASTE AND IN E F FIC IE N C Y

OUT tiF GOVERNMENT EXPENDITURES AND SET IN TRAIN A FURTHER REDUCTION IN THE

CANBERRA BUREAUCRACY.

T H IS YEAR'S BUDGET W IL L KEEP INFLATION ON THE WAY DOWN W H ILE , AT THE SAME

T IM E , UNDERPINNING A HEALTHY BUT MODERATE RATE OF REAL ECONOMIC GROWTH.

THERE IS ONE P O IN T THAT I WOULD L IK E TO PARTICULARLY STRESS.

WE HAVE BROUGHT IN THE MOST BEN EFIC IA L AND FAR-REACHING REFORM EVER MADE TO

THE AUSTRALIAN INCOME TAX SYSTEM W HICH, COMBINED W ITH TAX INDEXATION LAST

YEAR, GIVES T H IS COUNTRY ONE OF THE MOST ADVANCED AND ENLIGHTENED TAX *

SYSTEMS IN THE WORLD.

THE GREAT MAJORITY OF AUSTRALIAN TAXPAYERS W ILL BE PAYING SUBSTANTIALLY.LESS

TAX T H IS YEAR AND MANY PEOPLE ON SMALL INCOMES WHO WERE TAXED LAST YEAR W ILL

NOT BE PAYING ANY TAX AT ALL AS A RESULT OF OUR REFORMS. ,

NEARLY 9 0 PER CENT OF TAXPAYERS W ILL PAY TAX ONLY AT THE STANDARD RATE OF

32 PER CENT.

IF ACCOUNT IS TAKEN OF BENEFITS THROUGH TAX INDEXATION IN JULY T H IS YEAR,

AS WELL AS FROM THE NEW TAX SYSTEM, TAKE HOME PAY FOR A TAXPAYER ON AVERAGE

WEEKLY EARNINGS W ITH A DEPENDENT SPOUSE W ILL HAVE INCREASED BY $ 6 .6 0 PER

WEEK BY FEBRUARY.

I SHOULD MAKE IT CLEAR THAT REDUCTIONS IN INCOME TAX WOULD NOT HAVE BEEN

POSSIBLE IF WE HAD F A ILE D TO RESTRAIN GOVERNMENT SPENDING.

AS A RESULT OF T H IS YEAR'S BUDGET, AND PARTICULARLY THE REDUCTIONS IN INCOME

TAX RATES, THE WAY IS NOW OPEN FOR ALL OF US.TO GET ON W ITH THE JOB OF WORKING

OUR WAY OUT OF THE RECESSION CREATED BY LABOR'S P O L IC IE S .

SUPPORT FOR RURAL INDUSTRIES

' ■ '■ · . . ■ - 2 - ■

IT IS , OF COURSE, V IT A L FOR THE RURAL SECTOR THAT THE BUDGET STRATEGY SUCCEEDS

AND I TH IN K HERE, P R IM A R IL Y , OF THE A N T l-IN F L A tlO N THRUST OF T H IS YEAR'S

MEASURES. ,

> . . 3

" V · . · : . ' ' / . . . , . .. . : . . .

A FURTHER REDUCTION IN THE RATE OF INFLATIO N IS THE ONE THING THAT CAN DO

MORE FOR RURAL AUSTRALIA tHAN ALL THE OTHER MEASURES PUT TOGETHER:

- BY BRINGING R IS IN G COSTS UNDER CONTROL; ' · ' ' . ■ ' - ' ' ' · ‘ · . ' x '

' , . ' / . ."·

- AND THEREBY MODERATING THAT REMORSELESS COST-PRICE SQUEEZE

THAT HAS BORNE SO HEAVILY ON THE FARMING COMMUNITY IN RECENT

T IM E S .

IN SAYING THAT I AM NOT, OF COURSE, IMPLYING THAT IN D IV ID U A L , S P E C IF IC ,

MEASURES ARE UNIMPORTANT1.

FAR FROM I T ,

IN T H IS YEAR'S BUDGET - AS WE D ID LAST YEAR - THE GOVERNMENT HAS GIVEN

RECOGNITION TO THE SPECIAL NEEDS OF THE RURAL SECTOR, DESPITE THE NEED FOR

STRINGENT CONSTRAINT ON THE OVERALL LEVEL OF OUR EXPENDITURES.

IN A D D IT IO N , A S IG N IF IC A N T PART OF THE MONIES PROVIDED TO STATE AND LOCAL

GOVERNMENT W ILL ALSO FIN D ITS WAY TO A S S IS TIN G THE DEVELOPMENT OF THE RURAL

SECTOR.

AND, OF COURSE, THE RURAL SECTOR W ILL BENEFIT ALONG W ITH THE REST OF

AUSTRALIA FROM THE MAJOR TAXATION CHANGES INTRODUCED BY MY GOVERNMENT AND

CONTINUED IN THE PRESENT BUDGET:­

- THE INDEXATION OF PERSONAL INCOME TAX;

* AND THE k O PER CENT INVESTMENT ALLOWANCE;

- a n d t h e r e f o r m o f Pe r s o n a l t a x e s ;

TO m e n t io n j u s t t h r e e .

REVERTING TO S P E C IF IC MEASURES, I PARTICULARLY DRAW ATTENTION TO THE RURAL

ADJUSTMENT SCHEME.

- 4 -

T H IS SCHEME BRINGS TOGETHER THE ADJUSTMENT ASSISTANCE MEASURES FORMERLY

p r o v id e d U n d e r s e v e r a l s e p a r a t e s c h e m e s , a n d i s t h e m a in m e a s u r e fo r

F A C IL IT A T IN G ADJUSTMENt BY FARMERS TO THE CHANGING S IT U A T IO N .

THERE WILL BE NO NEED TO REMIND T H IS AUDIENCE OF THE VERY DRASTIC CHANGES

IN THE EXPORT MARKET S ITU A TIO N FOR DAIRY PRODUCTS, IN PARTICULAR,

ESSEN TIALLY, THE SCHEME PROVIDES CONCESSIONAL FINANCE TO ENABLE E L IG IB L E

FARMERS TO IMPROVE T H E IR V IA B IL IT Y THROUGH DEBT RECONSTRUCTION, FARM B U ILD -U P

OR FARM IMPROVEMENT; OR TO CARRY ON UN TIL TH E IR INDUSTRY RECOVERS FROM

SET-BACKS OF A TEMPORARY NATURE SUCH AS DAIRY FARMERS EXPERIENCED T H IS TIM E

LAST YEAR W ITH SEVERE DROUGHT CONDITIONS AND A GLUT ON THE WORLD MARKET

FOR SKIM M ILK POWDER.

IT ALSO PROVIDES HOUSEHOLD SUPPORT AND REH AB ILITA TIO N ASSISTANCE FOR THOSE

WHO HAVE TO LEAVE THE INDUSTRY.

THE 1 9 7 7 /7 8 BUDGET PROVIDES $ 5 3 M IL L IO N FOR RURAL ADJUSTMENT OF WHICH

$ 1 5 M ILLIO N HAS BEEN ALLOCATED TO V IC T O R IA , INCLUDING $2 M IL L IO N CARRY-ON

FINANCE FOR THE BEEF AND DAIRY IN D U S TR IE S . ..

IN MY BUDGET SPEECH I ALSO ANNOUNCED THAT THE GOVERNMENT HAS DECIDED IN

P R IN C IP LE TO ESTABLISH A RURAL BANK.

DISCUSSIONS W ILL SHORTLY BE HELD WITH MAJOR LENDING IN S T IT U T IO N S ON SOME OF

THE DE TA ILS .

OUR PREFERENCE IS THAT THE RURAL BANK SHOULD TAKE THE FORM OF A RE-FINANCE

I n s t i t u t i o n - t h a t i s , i t w i l l w o rk i n c o n j u n c t io n w it h e x i s t i n g l e n d in g

I n s t i t u t i o n s , r a t h e r t h a n i n c o m p e t it i o n w it h t h e m .

IN t a k in g a d e c i s i o n o n t h i s m a t t e r t h e g o v e r n m e n t w as a s s i s t e d b y a r e p o r t

FROM A SUB-COMMITTEE ON THE GOVERNMENT MEMBERS' RURAL COMMITTEE WHICH WAS

CHAIRED BY J IM SHORT, MEMBER FOR BALLAARAT. I

I TAKE TH IS OPPORTUNITY TO RECORD THE VALUABLE ROLE THAT BARRY SIMON* AS A

MEMBER OF THE SUB-COMMITTEE, PLAYED IN THE PREPARATION OF T H IS REPORT*

• · · 5

- 5 -

THE COMMONWEALTH W ILL BE MAKING A NET CONTRIBUTION OF SOME $39 M ILL IO N TO

THE MEAT INDUSTRIES BY WAY OF DISEASE ERADICATION AND COMPENSATION EXPENDITURE

AND PROVISION OF MEAT INSPECTION SERVICES.

WE ARE ALSO INCREASING OUR CONTRIBUTION TO RURAL PROMOTION AND RESEARCH,

PARTICULARLY FOR WOOL, WHERE T H IS YEAR $31 M ILL IO N W ILL BE PROVIDED BY

THE COMMONWEALTH COMPARED WITH $21 M IL L IO N IN 1 9 7 6 /7 7 * ' .

THE BUDGET ALSO PROVIDES AN ESTIMATED $ 5 2 M IL L IO N TO A SSIST FARMERS PURCHASE

. F E R T IL IS E R S , BY WAY OF THE PHOSPHATE FE R T IL IZE R S BOUNTY AND THE NITROGENOUS

F E R TILIZE R S SUB SID Y.

THESE MEASURES, TOGETHER WITH OTHERS, ARE TANGIBLE EVIDENCE OF THE GOVERNMENT'S

CONTINUING CONCERN W ITH THE PROBLEMS BEING EXPERIENCED BY RURAL INDUSTRIES*

I MENTIONED EARLIER THE PROBLEMS OF THE DAIRY INDUSTRY, WHEN I WAS SPEAKING

OF THE RURAL ADJUSTMENT PROGRAM.

YOU W ILL ALL BE AWARE OF THE STRENUOUS EFFORTS OF THE COMMONWEALTH, ACTING

IN CONJUNCTION W ITH. STATES IN THE AUSTRALIAN AGRICULTURAL COUNCIL, TO SEE

IMPROVED DAIRY MARKETING ARRANGEMENTS ESTABLISHED IN AUSTRALIA.

OBVIOUSLY THERE ARE D IF F IC U L T IE S IN T H IS , BECAUSE THE LIVELIHOODS OF DAIRY

FARMERS ARE INTIM A TELY AFFECTED BY WHATEVER MARKETING ARRANGEMENTS ARE

DEVELOPED.

HOWEVER, STAGE 1 OF THE NEW ARRANGEMENTS, WHICH REPLACES THE OLD VOLUNTARY

EQUALISATION SCHEME, HAS NOW BEEN IMPLEMENTED.

THE AGRICULTURAL COUNCIL S T IL L HAS UNDER STUDY THE ARRANGEMENTS FOR STAGE 2 ,

WHICH IS SCHEDULED TO BE IMPLEMENTED NEXT JU LY , AND WHICH W ILL ADDRESS THE .

PROBLEM OF RELATING PRODUCTION LEVELS TO THE Q UAN TITIES WHICH CAN BE DISPOSED

OF IN REMUNERATIVE MARKETS.

Th e r e a r e d i f f i c u l t p r o b l e m s s t i l l t o b e r e s o l v e d h e r e .

A BIG CO-OPERATIVE EFFORT FROM ALL INVOLVED W ILL BE NEEDED, IF EQUITABLE AND

WORKABLE SOLUTIONS ARE TO BE FOUND.

IN THE MEANTIME $ 6 . 5 M IL L IO N HAS BEEN PROVIDED IN T H IS YEAR'S BUDGET FOR

UNDERWRITING PRICES OF DAIRY PRODUCTS.

MORE SPECIFIC ALLY T H IS AMOUNT IS TO MEET THE COST TO THE COMMONWEALTH OF

UNDERWRITING THE EQUALISATION VALUES OF CHEESE, SKIM M ILK POWDER AND CASEIN

UP tO 30 JUNE 1 9 7 7 AND UP TO 31 DECEMBER 1976 FOR BUTTER*

THE GOVERNMENT HAS ALSO ANNOUNCED THAT IT W ILL CONTINUE TO UNDERWRITE RETURNS

ON BUTTER, CHEESE, SKlM M ILK POWDER AND CASEIN IN RECPECT OF 1 9 7 7 /7 8 .

REGIONAL DEVELOPMENT AND DECENTRALISATION

· ■ ; ; .. . ■ ■ . · · ■ - 6 - ' ; . ' ' . . ; . ·

I TH IN K IT WOULD BE INAPPROPRIATE TO RESTRICT MY REMARKS TO JUST THE '

QUESTION OF SUPPORT FOR RURAL INDU STR IES.

OBVIOUSLY, FARMERS AND T H E IR FA M ILIE S L IV E AND WORK, AND PERFORM AN INTEGRAL

ROLE IN THE L IF E OF THE COMMUNITIES AROUND THEM, AND THEREFORE IT FOLLOWS

THAT YOU ALL HAVE A KEEN INTEREST IN THE IMPORTANT ISSUES OF REGIONAL

DEVELOPMENT AND DECENTRALISATION.

SO DOES YOUR GOVERNMENT,

A LARGE PART OF THE COMMONWEALTH'S EXPENDITURE WHICH ASSISTS REGIONAL DEVELOP­

MENT IS PROVIDED TO THE STATES AND LOCAL GOVERNMENTS BY WAY OF GENERAL

FIN A N C IA L ASSISTANCE, AND UNDER OTHER S P E C IF IC PURPOSE EXPENDITURE PROGRAMS

SUCH AS THOSE FOR ROADS, EDUCATION, HOSPITALS AND OTHER HEALTH IN S T IT U T IO N S .

FUNDS PROVIDED IN THESE WAYS ARE OF COURSE ALLOCATED BY THE STATES AND LOCAL

GOVERNMENTS AND HAVE AN IMPACT ON THE ACHIEVEMENT OF EACH STATE'S REGIONAL

DEVELOPMENT AND DECENTRALISATION PO LIC Y.

THE COMMONWEALTH GOVERNMENT HAS PROVIDED DIRECT F IN A N C IA L ASSISTANCE IN RECENT .

YEARS TO NEW SOUTH WALES AND V IC T O R IA SPEC IFIC A LLY FOR THE ALBURY-WODONGA

GROWTH CENTRE.

IN THE BUDGET FOR 1 9 7 7 /7 8 , $ 5 M IL L IO N IS PROVIDED FOR ASSISTANCE FOR DEVELOPMENT

OF ALBURY-WODONGA;

. . · . , · . . . ■ ' · i . .2

- 7 -

IN A D D IT IO N , A FURTHER $ 6 M ILL IO N HAS BEEN INCLUDED IN THE BUDGET S P ECIFIC ALLY

FOR DECENTRALISATION ASSISTANCE, BUT THE WAYS IN WHICH T H IS ASSISTANCE W ILL

BE PROVIDED HAVE S T IL L TO BE DECIDED.

TO BE SOUNDLY BASED, REGIONAL DEVELOPMENT MUST DEPEND ON THE A V A IL A B IL IT Y OF

RESOURCES, AND THE EXISTENCE OF VIABLE INDUSTRIES TO DEVELOP THEM.

RURAL IN D U S TR IE S , OBVIOUSLY, PLAY AN ESSENTIAL ROLE.

IN THE McMILLAN AND GlPPSLAND ELECTORATES YOU ARE, OF COURSE, ESPECIALLY

FORTUNATE IN ALSO HAVING THE MIGHTY RESOURCES OF THE LATROBE VALLEY COAL

DEPOSITS.

THESE DEPOSITS PLAY A FUNDAMENTALLY IMPORTANT ROLE IN V IC T O R IA 'S DEVELOPMENT:

- 8 0 PER CENT OF V IC T O R IA 'S E LE C TR IC ITY SUPPLY IS NOW GENERATED

: BY POWER STATIONS USING BROWN COAL FROM THE LATROBE VALLEY;

- , MORE THAN 28 M ILL IO N TONNES OF BROWN COAL A YEAR ARE BEING WON

FROM THE STATE E L E C TR IC ITY COMMISSION'S MINES A t YALLOURN,

YALLOURN NORTH AND MORWELL.

THE COMMISSION'S PLANS TO DEVELOP THE LOY YANG F IE L D W ILL HAVE A CONSIDERABLE

IMPACT ON THE GROWTH AND S T A B IL IT Y OF THE VALLEY. .

WHEN OTHER COUNTRIES ARE SO CONCERNED OVER ENERGY S U P P L IE S , AUSTRALIA AS A

WHOLE IS FORTUNATE IN IT S LARGE RESERVES OF COAL AND OTHER ENERGY MATERIALS.

EVEN SO, WE SHOULD S T IL L BE SEEKING TO MAKE THE MOST ECONOMIC USE OF OUR

ENERGY RESOURCES.

WE HAD THAT VERY MUCH IN MIND IN DECIDING ON THE NEW POLICY FOR CRUDE O IL

WHICH WAS ANNOUNCED IN THE BUDGET.

ALSO, AS I ANNOUNCED IN THE BUDGET, THE COMMONWEALTH GOVERNMENT INTENDS TO

ESTABLISH A RESEARCH PROGRAM IN RELATION TO A U STR ALIA 'S COAL RESOURCES.

THE PROGRAM, NATURALLY, INVOLVES CONSULTATIONS W ITH THE RELEVANT STATE

GOVERNMENTS.

IT IS AN TICIPATED THAT THE PROGRAM W ILL INCLUDE INVESTIG ATIONS INTO THE

DEVELOPMENT OR M O D IFIC A TIO N OF TECHNOLOGY TO PRODUCE L IQ U ID FUELS AS AN

ALTERNATIVE TO THOSE TRADITIONALLY USED - AN E X C IT IN G PROSPECT, SHOULD THE

INVESTIGATIONS PROVE SUCCESSFUL. .

BEFORE LEAVING THE SUBJECT OF REGIONAL DEVELOPMENT I WOULD L IK E TO MENTION

RECENT IN IT IA T IV E S IN LOCAL GOVERNMENT FINANCE.

OUR MOST IMPORTANT STEP TO DATE IN T H IS DIRECTIO N HAS BEEN TO GRANT LOCAL

GOVERNMENT A GUARANTEED SHARE OF INCOME TAX COLLECTIONS, SO G IV IN G LOCAL

GOVERNMENT A SOURCE OF INCOME THAT WOULD R ISE AUTOMATICALLY WITH ECONOMIC

GROWTH.

LEGISLATION WAS ENACTED IN 19 7 6 PROVIDING FOR LOCAL GOVERNMENT TO RECEIVE

1 .5 2 PER CENT OF NET PERSONAL INCOME TAX COLLECTIONS OF THE PREVIOUS

FINANCIAL YEAR.

UNDER T H IS LE G IS LA TIO N $1*tO M ILL IO N WAS MADE AVAILABLE TO LOCAL GOVERNMENT IN

1 9 7 6 /7 7 - AN INCREASE OF 7 5 PER CENT OVER THE PREVIOUS YEAR'S ALLOCATION OF

GENERAL REVENUE ASSISTANCE.

A FURTHER INCREASE OF 1 8 .1 PER CENT TO OVER $ 1 6 5 M IL L IO N IN 1 9 7 7 /7 8 HAS RECENTLY

BEEN ANNOUNCED. .

THE D ISTR IB U TIO N OF T H IS ASSISTANCE, WHICH IS UNTIED AND MAY BE SPENT AS LOCAL

GOVERNMENT W ISHES, IS THE R E S P O N S IB ILITY OF THE STATE GOVERNMENTS, W IT H IN CERTAIN

GUIDELINES L A ID DOWN IN THE ACT.

UNDER THESE G UIDELIN ES THE STATES ARE REQUIRED TO D IS TR IB U TE THE FUNDS PARTLY

ON A POPULATION BASIS AND PARTLY ON AN EQUALISATION BASIS AND, IN L IN E W ITH T H IS

P R IN C IP L E , THE GRANTS TO LOCAL GOVERNMENT IN THE NON-METROPOLITAN AREAS HAVE

AVERAGED 2 - 3 TIM ES THE LEVEL PER PERSON OF GRANTS TO LOCAL GOVERNMENT IN THE

METROPOLITAN AREAS.

I BELIEVE T H IS MEASURE OF ASSISTANCE TO BE ONE OF THE MOST S IG N IF IC A N T REFORMS

IN INTERGOVERNMENTAL RELATIONS IN AUSTRALIA AND THERE CAN BE NO DOUBT THAT IT

HAS GREATLY ENHANCED "THE FIN A N C IA L PO S ITIO N OF LOCAL GOVERNMENT.

- 8 -

. . . 9

BEFORE TURNING TO LOOK SPEC IFIC A LLY AT THE OUTLOOK FOR THE RURAL SECTOR I WOULD

L IK E TO MAKE SOME MENTION OF THE COMMUNITY HEALTH PROGRAM.

T H IS PROGRAM I S , I B E L IE V E , PLAYING A VALUABLE ROLE IN T H IS REGION AND BARRY SIMON

HAS PRESSED THE GOVERNMENT, SUCCESSFULLY, FOR CONTINUATION AND EXTENSION OF I T .

UNDER THE COMMUNITY HEALTH PROGRAM THE COMMONWEALTH IS PROVIDING SUBSTANTIAL

FIN ANC IA L ASSISTANCE FOR SOME 7 0 0 COMMUNITY HEALTH PROJECTS.

THERE ARE, I AM INFORMED, CENTRES AT CHURCHILL, MOE, MORWELL, SAN REMO AND

COCKATOO - ALL W IT H IN THE McMlLLAN ELECTORATE.

T H IS YEAR WE ARE PROVIDING FOR A 13 PER CENT INCREASE IN T H IS PROGRAM WHICH

REPRESENTS A R IS E IN REAL TERMS. . .

RURAL OUTLOOK

I TURN NOW TO THE RURAL OUTLOOK FOR T H IS FINANCIAL YEAR,

THE MATTER RECEIVED CONSIDERABLE P U B LIC IT Y LAST MONTH WITH THE RELEASE BY THE

BUREAU OF AGRICULTURAL ECONOMICS OF IT S LATEST FQRECASTS FOR 1 9 7 7 /7 8 .

THE BAE ESTIMATES THAT THE GROSS VALUE OF RURAL PRODUCTION W ILL REACH A RECORD

LEVEL IN 1 9 7 7 / 7 8 : ­

- WITH IMPROVED RETURNS IN THE MEAT AND DAIRY IN D U S TR IE S , AS WELL AS

MOST CROP IN D U S TR IE S , EXPECTED TO MORE THAN OFFSET SOMEWHAT LOWER

RETURNS FOR WOOL AND SUGAR.

FARM COSTS, HOWEVER, ARE ALSO EXPECTED TO RISE S IG N IF IC A N T L Y .

AS A RESULT IT IS EXPECTED THAT AGGREGATE FARM INCOME IN REAL TERMS W ILL DECLINE

SOMEWHAT IN 1 9 7 7 /7 8 .

SUCH FORECASTS ARE, OF COURSE, ALWAYS FALLIBLE DESPITE THE HIGH TECHNICAL

COMPETENCE OF T H E IR AUTHORS.

LAST YEAR, FOR EXAMPLE, THE COMPARABLE FIGURES SUGGESTED A DECLINE IN REAL

FARM INCOME OF 2 6 PER CENT.

IN THE OUTCOME, REAL FARM INCOME ROSE BY ABOUT 8 PER CEHT REFLECTING IMPROVEMENT

IN SEASONAL CO ND ITIO N S.

10 -

IT IS WORTH NOTING TH A T, IN 1 9 7 6 /7 7 , REALISED INCOME OF UNINCORPORATED FARM

ENTERPRISES, AT $ 2 . 3 B IL L IO N , REACHED ITS HIGHEST RECORDED FIGURE,

WHATEVER THE EVENTUAL OUTCOME FOR 1 9 7 7 /7 8 MAY PROVE TO BE, THE BAE FORECASTS

CAN ONLY LEND EMPHASIS T O :­

- THE OVERRIDING NEED TO RESTRAIN IN F LA TIO N ;

- AND THE VALUE, TO THE RURAL COMMUNITY, OF THE GOVERNMENT'S

f RURAL ADJUSTMENT SCHEME.

FOR SOME RURAL IN D U S TR IE S , PARTICULARLY BEEF AND D A IR Y IN G , THE MARKET PROSPECTS

FOR 1 9 7 7 /7 8 W ILL CONtlNUE TO DEPEND HEAVILY ON IMPROVED ACCESS TO OVERSEAS

MARKETS.

AS YOU ARE AWARE, THE GOVERNMENT IS MOST CONCERNED WITH T H IS PROBLEM AND IS

TAKING AN AGRESSIVE ROLE IN EXTENDING SUCH ACCESS.

WE HOPE THAT THE APPOINTMENT OF A M IN IS TE R FOR SPECIAL TRADE NEGOTIATIONS

W ILL ENABLE US TO MAKE CONSIDERABLE PROGRESS IN T H IS D IR E C TIO N .

PROGRESS HERE WOULD HELP, OF COURSE, IN R EINING IN THE LONG-TERM DECLINE IN ,

WHAT HAS BEEN CALLED THE FARMERS' "TERM OF TRADE" - THAT I S , THE RATIO OF

PRICES PAID TO PRICES RECEIVED.

IT REMAINS TRUE THAT PRICES RECEIVED BY FARMERS FOR TH E lR PRODUCT ARE LARGELY

DETERMINED BY INTERNATIONAL SUPPLY AND DEMAND C O N D IT IO N S :­

- HENCE ANY FUNDAMENTAL IMPROVEMENT IN FARMERS' TERMS OF TRADE

HINGES ON A S IG N IF IC A N T REDUCTION IN THE RATE OF IN F LA TIO N .

I THEREFORE CONCLUDE ON THAT THEME.

THE BUDGET ASSURES FURTHER SO LID PROGRESS TOWARDS THE GOVERNMENT'S ECONOMIC

AND SOCIAL O BJEC TIVES.

RUT AS I SAID LAST TUESDAY N IG H T , THE FUTURE DOES NOT L IE IN THE HANDS OF

GOVERNMENTS ALONE.

R E S P O N S IB ILITY L IE S W ITH ALL SECTIONS OF THE COMMUNITY.

11 • * ·

ί BELIEVE THAT THE COMMUNITY IS PREPARED TO MEET A CHALLENGE.

T H IS YEAR'S BUDGET GIVES ALL OF US A CHANCE TO WORK TOGETHER FOR THE ECONOMIC

AND SOCIAL PROGRESS OF T H IS NA TIO N ___FOR THE WELL-BEING OF THOSE ON THE

LAND AS WELL AS THOSE IN THE C IT IE S .

19 A u g u s t 1977