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Re-endorsement of restraint and Commonwealth expenditure

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NO. 3.

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The Treasurer, Μα: John Howard, and the Minister for Finance,

Mr Eric Robinson, said today that the Government had reaffirmed .

the importance, for its economic policy, of maximum restraint

on Commonwealth expenditures over the. balance of the financial

year. ■

The two Ministers noted that a responsible fiscal policy achieved

through expenditure restraint has been and continues to be a .

vital plank of the Government's general economic policies. ,

The Ministers emphasised that the fruits of the,Government's

fiscal and other economic policies we re now beginning to appear.

The foundations had been laid for a period of sustained expansion

with considerably lower rates of inflation. In particular,

the strengthening in business and consumer confidence had been,

reflected in recent pick ups in consumer expenditure and invest­

ment outlays. At the same time these policies had permitted

major taxation reforms to be undertaken.

Against that background, the Government had examined the prospective

Budget outcome for 1977-78 and noted indications that, for a

variety of reasons, the deficit was likely to be greater than the

$2,217 million budgeted for. < " , .

• l ' _ , ' · ·

The .larger revisions have been on the revenue side of the Budget. ,

In this regard the two Ministers noted a number of factors pointing

to receipts lower than Ministers had expected at Budget time,

particularly in the areas.of:

2 .

customs duty, where the reduction in the estimate partly

reflected a downward revision to expected imports for the

year as a whole in the light of the continuing fall in

imports consistent with the devaluation decision of late

19 76; '

PAYE refunds, which will be significantly above the level

expected at Budget.time; this development reflects the

degree of uncertainty surrounding this estimate following

the first full year in which the "Hayden" rebate scheme

took effect. · ■ . ·

The Ministers noted that decisions taken by the Government since

the Budget in response to pressing need had also added to the

estimate of prospective outlays for the year.

These expenditure decisions included additional assistance to

the beef industry and to rural producers to alleviate the serious■

consequences of the continuing drought. Additional funds had

also been approved for accommodation for aged persons.

As to the re-endorsement of expenditure restraint for Government

programs, the Ministers, by way of elaboration, noted that:

. . cost increases during the year will be absorbed or offset

by savings elsewhere to the maximum extent possible;

. generally, any possible savings which emerge will be realised

and not directed to other expenditures;

. no new initiatives which entail additional expenditures

in 1977-78 will be contemplated unless they are either

both urgent and unavoidable, or are directly related to

and a consequence of policy undertakings already announced.

The Government had decided that, as a further step in '

working towards expenditure restraint, Departments should,

in preparing their forward estimates of expenditure,

.include' details of:- . '

- funds needed to maintain each program at its

existing level of activity; .

- funds sought for any proposed expansion of a . .

program; and . .

* - I '

- funds sougftt for each proposed new program. .

The Cabinet noted, in addition, that the Minister for

Finance would, in the exercise of his normal responsibilities,

be expected to bring forward from time to time specific proposals for savings in expenditure.

Canberra A.C.T.

17 January, 1978.