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Thursday, 18 October 1984
Page: 1953

Senator FOREMAN(12.46) —Mr Acting Deputy President, today I want to make a few remarks about the 1984-85 Budget and the economy generally. The Budget has been subjected to some negative and short-sighted onslaughts by the Opposition, but the Australian public has reacted favourably to its measures . In essence it accentuates the achievements of the Labor Government since it came into office. During this fertile period, new jobs have been growing strongly and unemployment falling. The economy has picked up and is strengthening steadily. We have almost halved inflation; interest rates are dropping and the housing industry is enjoying great buoyancy. The Labor Government has stimulated the economy and stabilised the industrial relations environment to the extent that consumer confidence has been restored, investment has picked up, profits are growing and the level of industrial disputes has dropped radically.

The Budget has been well received by the business community. According to a poll conducted by the Australian and Channel 10, 52.8 per cent of chief executives and financial controllers of 231 companies around Australia believe that the Budget will maintain the economic recovery, and 51.9 per cent of them feel that Australia is now entering a period of sustainable economic growth. They are also more impressed by the performance of the Treasurer (Mr Keating) than by that of his Liberal predecessor. Fred Gruen, writing for the Melbourne Age, was of the opinion that this Budget strikes:

. . . the right balance between expanding the economy on the one hand and reducing the deficit and the rate of growth of Budget outlays on the other.

David Potts in the Australian stressed that it is first and foremost business which has given the Budget the 'thumbs up'. Nobody could argue that a lift in the share market and a fall in interest rates is an indication of an unsuccessful Budget. On the contrary, it is a vote of confidence in the economy, in the Treasurer, and in the Australian Labor Government by the business community of Australia. This vote of confidence has been endorsed internationally by Euromoney, which awarded the Treasurer, Mr Keating, the title of Finance Minister of the Year. The success of Labor's economic policies is further underlined by that magazine's description of Mr Keating as the most impressive Treasurer since the war.

This Budget is a progression from the moderate and responsible 1983-84 Budget, and sees the Budget deficit-which I might state is a legacy of the previous Administration, which incompetently mishandled the Australian economy during its time in office-reduced by $3.7 billion. From a situation where Australia was suffering under the worst economic depression since the 1930s, we have seen a considerable regrowth in the economy and an improvement in the lot of the Australian people. From June 1983 to June 1984, our economy grew by an extraordinary 10 per cent in real terms. The annual inflation rate fell from a high 11 1/2 per cent under the Liberals to 6.5 per cent, and is expected to go down to at least 5 per cent during the coming financial year. Unemployment levels have fallen from 10 per cent to 8.9 per cent. In June, it was predicted that over the next 18 months Australia would have the strongest economic growth of any Western country. In September the influential Conference Board of New York observed that our economy was expanding at an annual rate of 15 per cent, and the latest forecasts prepared by the International Monetary Fund foresee Australia's economic growth exceeding that which was predicted when the Budget was first brought down. As Mr Keating says:

Australia is back in the international race again.

The Budget provides for generous tax cuts which will apply to most wage earners, but which will benefit the low and middle income earners most. Single taxpayers who earn up to $12,500 per annum will be given a tax cut of almost 17 per cent, and taxpayers who earn over $12,500 but not more than $28,000 will gain $7.60 a week. Those earning more than $28,000 will also receive a tax cut, which will steadily reduce as incomes exceed $28,000, so that people earning over $35,000 will gain an increase of $2.79.

These tax cuts are quite genuine and they go beyond tax indexation overall, benefiting the low and middle income earners most. Because these cuts are genuine, the Australian Council of Trade Unions has agreed not to claim any wage increases until 1985. Thus the accord has been sustained and Australia's economic recovery can continue. The tax cuts will bring about a significant redistribution of income. The consumer will have more purchasing power and so the economy will be further stimulated. These tax cuts provided for in the 1984- 85 Budget will be of more benefit to the vast majority of workers than the rarely used tax indexation rules brought in by the Fraser Government. Under those rules, workers earning between $406 and $686 a week would gain $7.49 but those workers earning up to $374 a week would gain a tax cut of only $2.30. The total cost of this Budget's tax cut is $2.1 billion, and this is a great deal more than the cost of indexation. So the benefits of the tax cuts to the taxpaying public are, I repeat, very genuine, and perhaps the best feature is that everyone who is a wage earner gets a tax cut.

I feel that I must at this stage draw attention to the behaviour of the Opposition in regard to another of the Budget measures-that is, the assets test. This test is designed primarily to ensure that those who can afford easily to live without the pension do not abuse the system, and that social security spending goes in the right direction in the future. The Opposition has represented it as some kind of SS operation whereby the pensioners will be harassed and their privacy invaded. Inspectors will not be entering people's homes, and in fact only abut 40,000 pensioners, or 2 per cent, will be affected. Most will not even have to fill out an assets test form. It is thanks to the Opposition's exaggerations that we have such tragic occurrences as the case of the pensioner couple who withdrew all their savings, fearing that they would lose the pension, and then found themselves robbed; or the piteous letter sent to the Australian Pensioner by a pensioner who had been told that to prove that he had told the truth he would have to strip naked. This atmosphere of panic is unnecessary and unwarranted, and it is irresponsible and cruel of the Opposition to cause such hysteria where it is not justified. I point out that Opposition members were happy enough to support the idea of some type of assets test when they were in government. Their behaviour now constitutes a complete turnaround.

In the area of employment generation, the Budget contains provisions for expenditure on labour market programs and services to be increased by more than 10 per cent to the record level of $846m. Compared with the last year of the previous Government we will have increased this expenditure by 146 per cent. More than 320,000 people will be receiving employment assistance through job creation projects or will be given assistance under other labour market programs . The community employment program will have its allocation increased by 44 per cent to $410m and 65,000 unemployed people will be given help from it in the next financial year. I am pleased to see that the community employment program will continue to be directed towards the long term unemployed and other disadvantaged groups. Long term unemployment is still a particular problem.

Another area with which I am concerned is that of young people's employment. The special youth employment training program will receive $108.9m, which will give subsidised work experience to about 87,500 unemployed young people. Also, $ 26.2m will be devoted to the community youth support scheme. Other projects will be the adult wage subsidy scheme, trade and skills training schemes and Aboriginal training programs. Since it came to office, this Government has given a great stimulus to the housing industry. Many thousands of Australians have been enabled to buy or build homes they can afford, and the economy in general has been greatly boosted. This is a big contrast to the 20-year low in new dwelling commencements under the previous Government. The 1984-85 Budget makes provision for $1,252m to be spent on housing, which is an increase of 21 per cent on the 1983-84 Budget, and which is up 69 per cent on funding provided by the previous Government in 1982-83. The first year of the first home owners scheme has seen 80,000 successful applicants, expenditure of $220m, and the creation both directly and indirectly of 80,000 jobs. In 1984-85 there will be an increase in expenditure on the first home owners scheme of more than 85 per cent. The Commonwealth-State Housing Agreement will provide a basis for a 10- year program to alleviate housing related poverty.

As Chairman of the Joint Standing Committee on Public Works, I am pleased to see that the Budget provides for an increase of expenditure on public works of 20 per cent. There will be increased expenditure on all major projects. These include $597m of airport works around Australia, $68m of works associated with Commonwealth offices and $30m of works at repatriation general hospitals. In South Australia work will continue on the Daw Park Repatriation Hospital and the Woodside army base. During 1984-85, construction will commence on the Adelaide Airport operations facilities and domestic apron, Pennington Migrant Centre and the Adelaide Commonwealth Government Centre complex, which will provide a boost to the construction industry in that State. Altogether, this Budget is a balanced document which will ensure the continuation of Australia's strong economic recovery. Its tax cuts and welfare measures will further boost consumer demand and, because the deficit is lower, conditions will favour the further reduction of interest rates. Business profits are being substantially restored and the prices and incomes accord has created an environment for the maintenance of appropriate income shares between wages and profits. We can look forward to another year of strong economic growth under the Labor Government, with employment recovery, a stable industrial relations environment, reduced inflation and a more equitable distribution of income.