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Tuesday, 26 August 1980
Page: 747

Dr KLUGMAN (Prospect) - It is not surprising that the Minister for Finance (Mr Eric Robinson) in the 'End of term report' in the Melbourne Age some two months ago had the following write-up:

Robinson, Eric - Minister for Finance. Profoundly ignorant of economics. Doesn't seem very bright. Has the reputation of being a power in Queensland, and is therefore safe.

That was the full write-up for the Minister.

Mr Dobie - Did you write this?

Dr KLUGMAN - No. It was one of the honourable members opposite. I tipped one member but he denied it. It was probably one of the Victorian senators. If we look at the write-up for the present Minister for Health (Mr MacKellar) it states:

MacKellar, Michael - Minister for Health. Suspected of being a lightweight. Saved by coming from New South Wales, if he had come from Victoria he would have been a permanent backbencher. Career depends on doing something politically popular about health (its effect on health standards is immaterial). Likes dealing with foreign affairs, about which he is very ignorant.

This report was written by one of the members of the Liberal Party. Who am I to argue with it? When listening to the Minister for Finance one would have thought that one was listening to a spokesman for a low tax government. What are we dealing with? We are dealing with a government which has increased taxation more than any government of this country. If we look at page 333 of Hansard of last Tuesday which deals with Budget receipts we see that the proportion of the gross domestic product collected in Budget receipts is estimated this year- everybody agrees that the estimate is low- to be 26.7 per cent. Under the Labor Government it was 24.8 per cent. It has gone up to 26.7 per cent. At the time of the Gorton Government in 1970-71 it was 24.1 per cent. At the time of the Labor Government when it went up to 24.8 per cent of the gross domestic product there were many screams in this community. Some of them may well have beer, justified. They concerned the increase of money taken out by the Commonwealth Government in Budget receipts.

What has happened during the last four or five years? The gross domestic product being taken out in receipts and being removed from the community has increased from 24.8 per cent to 26.7 per cent. Let us look at what has happened. Between 1975-76, the time of the so-called Hayden Budget, and 1980-81, which involves the current Budget which we are discussing today, income tax paid by individuals has increased from $9,21 9m to $ 17,070m, an increase of 85.2 per cent. Total tax revenue has increased from $16.8 billion to $31.8' billion, an increase of 88.8 per cent. In the same period the consumer price index increased by 55.7 per cent. We have an increase in the consumer price index of 55.7 per cent. In the same period this low tax government increased total tax revenue by 88.8 per cent and income tax paid by individuals by 85.2 per cent. Excise duty on oil and gas increased by 1 ,096 per cent. So much for a low tax government! I would hate to find a high tax government facing us. I ask for leave to incorporate a table in Hansard.

Leave granted.

The table read as follows -

Dr KLUGMAN - I ask for leave also to incorporate in Hansard a comparison of income to tax paying families from the family allowance scheme with what it would have been with tax rebates and child endowment. The table has been previously incorporated in Hansard but I ask leave for it to be incorporated again.

Leave granted.

The table read as follows -


Dr KLUGMAN - I thank the House. The table shows that every tax-paying family in this country is $4 a week worse off with one child; it is $7 a week worse off with two children; and $10 a week worse off with three children. This has resulted since this Government came to power. Finally, I ask for leave of the House to incorporate in

Hansarda table dealing with social security payments and education allowances showing the present payment, the date of the last increase, and the Budget increase. It demonstrates what the increase should have been if that increase had been according to the rise in the consumer price index.

Leave granted.

The table read as follows -


Dr KLUGMAN - I thank the House. The point I want to emphasise is that this Government is a high tax government. I wish to deal with one specific point dealt with by the Minister for Finance and that was the question of costing health expenditure or, would-be health expenditure under our so-called family health plan. At the time that policy was announced I was the Labor Party spokesman on health matters. I am prepared to argue that our costing of $ 130m is an accurate costing. Tonight the Minister decided to add $250m to that cost by taking some notional number- a fairly large percentage - of people who would withdraw from private health insurance if our scheme came into being. He did not tell us what figure his Government had picked on but it must have been a very large number of people to lead to an increase of $250m.

I will give one obvious example which will show that he does not understand the method of health financing and the costs to the Commonwealth Government if people remove themselves from private health insurance. He gave all costs to the Commonwealth if people removed themselves from private health insurance. I make the point quite clearly that it does not work that way at all. Let us take the average person who is admitted to hospital for, say, surgery. In the case of a public patient the Commonwealth and the States share the total expenditure fifty-fifty. No medical costs are involved for the doctor performing the operation or for the administering of the anaesthetic. But in the case of a patient who is admitted and who is covered by health insurance, the Commonwealth Government picks up the cost of all the medical expenses above $20. If the surgery costs $200 then the Commonwealth pays $ 1 80 towards the cost of that surgery. If the anaesthetist charges


$60 for administering the anaesthetic then the Commonwealth pays $40 towards the cost of that anaesthetic. If the patient is a so-called private patient that is a cost to the Commonwealth Government. It is different in relation to the States. The withdrawal of people from the health insurance scheme would not increase the cost to the Commonwealth Government.

Because the Budget debate provides one of the few opportunities to speak on almost any topic, and before coming back to what is strictly the Budget debate, I would like to speak briefly about foreign affairs. One of the things we ought to be worrying about is what is happening in Poland at the present time. I think that one ought to congratulate the Australian Council of Trade Unions for expressing its solidarity with the strikers in Poland and for supporting their attitudes. I think it is a worry for honourable members on this side of the House - it probably is on everybody's mind that the introduction, for example, of free trade unions, which is one of the demands of the Polish workers, will invite Soviet invasion of Poland as it did exactly 12 years ago in Czechoslovakia when the Czechoslovak Government made concessions to try to bring in what it called socialism with a human face. It is remarkable to me that there are still people who consider themselves socialists and who do not see that what is happening behind the Iron Curtain is a complete travesty of socialism. I ask leave of the House to incorporate in Hansard a table showing the ranking of nations by political rights and by civil liberties. This is a ranking prepared by Freedom House which is a fairly respectable American organisation.

Leave granted.

The table read as follows -



Dr KLUGMAN - I thank the House. I am pleased to see the Minister for Science and the Environment (Mr Thomson) sitting at the table tonight because, in my capacity as shadow Minister for science and administrative services, I would like to deal with problems facing science in Australia. It is an unfortunate fact of life that scientific and medical research funding will be held at low levels in countries with non-expanding economies where governments are confronted with harsh decisions concerning priorities and that the Australian research effort may fail to receive the attention in the next decade which it deserves and requires. The state of scientific research in Australia has been viewed all too complacently over the last few years. Whilst no political party can guarantee to restore the halcyon days of growth of research and tertiary institutions in a non-expanding economy, Australia lags behind comparable countries in the funding of scientific, technological and medical research.

Australia's research effort is small and, over the last four years, has declined to dangerously restricted levels, with no consideration of our long term national interests. Commonwealth Government funds expended on research and development in Australia in 1978-79, as compared with 1973-74, have dropped in real terms by 18 per cent. In recent years the Government has ignored the calls for increased research funding by the Organisation for Economic Co-operation and Develpment Examiners in Science and Technology, the Australian Science and Technology Council, the Tertiary Education Commission, the Australian Academy of Science, the Industries Assistance Commission, academic staff associations, the Committee of Inquiry into Education and Training and the Senate Standing Committee on Science and the Environment. Research contributes to industrial development, mastery of technological innovation, improved use of resources, energy self-sufficiency and an increased standard of living.

It is accepted that it is necessary, as a matter of national prestige, that we participate meaningfully in the extension of knowledge, particularly in matters related to the Australian skies, sea and land mass and, of course, to areas of the Antarctic under our care. Such activities contribute to the intellectual and teaching vitality of our academic institutions and form the basis of practical applications. The Australian Research Grants Committee was allocated $ 13.9m in the 1979-80 Budget. In real terms this represented a cut of 8 per cent compared with the amount allocated in 1976-77. The current Budget, the 1980-81 Budget which we are discussing now, increases this figure by about 9 per cent which is less than the rate of inflation. The science statement for the 1980-81 Budget shows an increase of only 8.4 per cent in funds for the Commonwealth Scientific and Industrial Research Organisation leading, to quote the Minister: ... to a further slight contraction in the Organisation's total research activities, because of staff ceiling adjustments and a reduction in real terms in operating funds.

So we see a further drop in the amount of money available for scientific research in Australia. The National Health and Medical Research Council was allocated $ 14m for the 1979-80 financial year which represented only 0.2 per cent- one-fifth of one per cent- of the total health budget compared with 0.4 per cent four years previously. The Council has been able to fund only 37 per cent of applications for the next year. The manpower engaged in research and development in business enterprises has dropped from 14,710 in 1973-74 to 7,651 in 1978-79, a decrease of nearly 50 per cent. These are the latest figures that I have been able to find. This suggests a serious drop in the rate of innovation in the manufacturing industry. The report of the Senate Standing Committee on Science and the Environment on industrial research and development in Australia which was presented last year stated:

In the competition between nations and between enterprises, many elements play their part including national resources, investment strength, and traditional skills and attitudes. However, one critical element is the ability to innovate and thereby achieve technological strength.

A manufacturing industry without innovation will not produce competitive products, will be at the mercy of imported technology, will be unable to draw on research and development resources and technical expertise in universities and government establishments and, ultimately, will decline, taking with it jobs and wealth.

There is also a need for Federal and, where appropriate, State governments to develop greater discrimination in incentives. Too often previous schemes have either spread the resources so thinly as to render them ineffective or have served only to channel them to the large and capable firms least in need of them. There is a need to discriminate between process innovation which, by and large, is job displacing and product innovation which is job creating. Whilst firms may quite reasonably wish to improve their productivity through capital intensive development, there is no reason why they should be subsidised in this by government. The level of uncertainty is low, the market is established and the capital is available. In other words, the level of risk does not require support from public moneys nor should they assist in labour displacement. In other words, public moneys should not assist in labour displacement.

Growing technological complexity can bring with it a danger of polarisation and conflict. Society appears to be already dividing into those who are familiar with science and those who are fearful of it. There is a rising disquiet in the community about some aspects of science and the possible effect of new technologies on employment is one such issue. There are others including nuclear energy. In many cases, there is a lack of scientific understanding on both sides of politics about its benefits and dangers. If we want to compete it is terribly important that we have an intelligent and educated community which is able to take advantage of technological advances and which is aware of, but not unnecessarily scared of, the non-benefits of new technologies. I am one of those who are optimistic about science. I believe that it may solve many of the problems which face us, as it has in the past. It is important that those supporting or opposing new technologies put on their platforms not extremists who take only one point of view but people who are obviously able to see both sides of the issue and who are able to provide us with intelligent leadership in the future. I feel confident that the majority of the population of Australia is looking for rational discussion, not messianic statements of heaven on earth or of doom.

Let me deal with one very short point in my other area of responsibility, that of administrative services. One of the items dealth with in the Budget under the Department of Administrative Services is the Government Information Unit, which is the political propaganda unit of this Government. It is difficult to obtain exact figures of its expenditure, in the last financial year or in the coming financial year. But it appears, inasmuch as we can correlate the expenditure, that last year the Unit spent $271,820 and that the estimated expenditure for the coming year is $329,900. This is a large amount of money for a political propaganda unit led by Mr Vincent Matthews, who was formerly with one of the newspapers but is now working for the Government to push its line.

I come back to the point with which I started and emphasise that this Government pretends to be a low tax government. In fact, it is a government which has increased taxation to a higher point, a higher proportion of the total gross domestic product, than it has reached under any other Federal government in Australian history. It is important that the Australian people realise that this Government is a high tax government. Let me quote the words of one gentleman, the Victorian

Treasurer, Mr Lindsay Thompson, who is probably a man of some standing amongst members of the Government. Commenting on the Government, Mr Thompson said that he was disappointed that grants to the States increased by 10.4 per cent while Commonwealth expenditure increased by 1 5.6 per cent. In fact, this year the Commonwealth's takings- the Budget receipts - are estimated to increase by over 1 6.2 per cent. So much for a government which pretends to be a low tax government. So much for a government which pretends that it cannot do certain things because it does not have enough money coming into its coffers.

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