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Wednesday, 23 August 1972
Page: 331

Senator WILLESEE (Western Australia) - I thank the Acting Leader of the Government in the Senate (Senator DrakeBrockman) and the Senate for their courtesy. I think I can promise that I shall not take up the full time because I am one of those people who believe always that the length of a speech does not have anything to do with the wisdom of it. In fact I think that sometimes quite the reverse is true. If this is a minority view for a parliamentarian, at least minorities have their rights. Before beginning my remarks on the Budget I should like to apologise on behalf of Senator Murphy who normally would be the opening speaker for the Aus tralian Labor Party. He has succumbed to the wog which is taking a toll of so many senators. I suppose this is fairly understandable when we realise that probably the worst victim of all is the Minister for Health (Senator Sir Kenneth Anderson), in respect of whom it is perhaps a case of the physician being unable to cure himself.

Last year in introducing what was his first Budget the Treasurer (Mr Snedden) said:

Even more than usually the Government has this year found it necessary to shape its Budget to serve an overriding economic purpose.

This year in introducing what will be his last Budget Mr Snedden should have said: Even more than usually the Government has this year found it necessary to shape its Budget to serve an overriding electoral purpose.' Let there be no mistake about it: This is a Budget designed to try to save the Government's fortunes at the coming general election. Anyone who fails or refuses to face this obvious fact is in the kindergarten stage of politics or, indeed, of electoral responsibility. Considerations such as sound economic practice and the introduction of measures to advance the cause of genera) social welfare and equity have all been submerged beneath the paramount purpose of maintaining this tired, desperate and political bankrupt Government in office.

Looking at the Treasurer as he delivered his Budget this year we marvelled at his change of heart from last year. Here, indeed, was the miser turned profligate. A comparison of this year's Budget with that of last year shows that Mr Snedden, on behalf of the Government, can expect to feature briefly in future history books as the traffic-light Treasurer. He has shown himself to be one of Australia's leading exponents of stop-go economics, but without the concession or courtesy of an amber light. The Treasurer was anxious, perhaps as an election slogan, to give a brief portrayal of the Budget as he saw it. He said: Taxes down, pensions up and growth decisively strengthened.' In the old days we always gave a name to the Budget but this one, so far, has not attracted a name. If I had the job of giving it a name I would call it a Band-Aid Budget because it has been hastily slapped on the unhealed wounds inflicted by his Budget of last year.

Let me now deal in some detail with various aspects of this politically motivated Budget. I deal first with unemployment. The day before the Budget was brought down the Minister for Labour and National Service (Mr Lynch) announced that during July unemployment had reached 2 per cent of the work force. In seasonally adjusted terms this meant that more than 112,000 members of the Australian work force were out of a job. Hard core unemployment, which is indicated by the number of workers on the dole, had risen to 43,000 - more than double the corresponding figure for the previous year. The other important employment statist tics - the number of registered job vacancies - fell to 31,000. The unemployment situation is extremely grim. When" Labour Party members and senators have drawn attention to the high rate of unemployment and the prospect of its worsening, Government spokesmen have been quick to accuse us of being latter day Jeremiahs. We have been accused of undermining business confidence. Worst of all, we have had the impudence to be correct.

The annual report of the Reserve Bank released last week indicates that unemployment cannot be expected to drop significantly in the near future. What does the Treasurer have to say about unemployment? He says:

The figure compares well with almost any other developed country today. But it is still too high for us and we are determined to reduce it.

When Ministers are replying to questions that they have written out for their back benchers relating to these comparisons, I wish they would be a little fair and point out that the way in which the Australian set-up numbers its unemployment is vastly different from the system used in other countries. Let me mention only one country. Canada. They count their Indians in their unemployed. We do not count our Aborigines as unemployed. In Canada they count youth labour in their unemployed. Many of the hotels at leading tourist attractions in Canada are run by school children, by which I mean people who attend universities and high schools. I am referring to places like Jasper which closes down during the snow period. For those honourable senators who cannot recall where Jasper is on the map, it is the place where Mr Gorton fell off his horse. If one goes to those places one sees that they are run entirely by youths, males and females. Canada has a system under which a person, with the very first pay packet he- draws, is given a social security number.. When he is back at the university or attending his latter days of high school he is still on the unemployed list. The moment that anyone goes out of work - on the very first day - he is counted as unemployed, whereas' in Australia there is a delay. In addition to that, because of the very definite winters in Canada, with conditions which we do not have ' in'"'this country, there is a distinct stopping of seasonal work. This has nothing to do' with the way in which' the unemployed are ' counted, but it is one "of the differences between that country and this.

Senator- Byrne- We have seasonal unemployment in Queensland. ., ' ,

Senator WILLESEE - Yes, but when there is seasonal unemployment- in Australia a person can move.;from one place to another.- He is not completely pinned down. Once the snow falls on. the prairies of Canada, everything- ceases. I merely suggest that the Government, to be a little honest and not misleading when it is dealing :with ^comparisons between other countries and Australia,- should mention these things. I realise that. it. is almost impossible to draw parallel; lines in any comparison . between this : and another country. Mr Snedden said . that unemployment is still too high for us* and that he is determined, to reduce it-.. -.His professed determination is not matched by any proposed action discernable in - the Budget. The unemployed must pin their hopes on the bulk of the income tax cuts being quickly spent so as to boost demand and create employment.

The Treasurer this year- has thrown $432,m to the taxpayers and he hopes that they will spend it. Let us consider who will receive this money 'before we decide whether it is likely that it will, be spent. He made great play of the fact that the tax scale has been restructured. On inspection we see that the restructuring affords only small relief to the bulk of taxpayers. In line with Liberal Party principles, the tax restructure still contrives to be .most generous to the rich. Dr Peter Sheehan of the

Australian National University has given an analysis of the income tax cuts. He said that despite the tax cuts over 1972-73 as a whole, the average taxpayer would pay a higher proportion of his income in tax than he did last year. From a welfare aspect he has estimated that more than half of the value of the proposed cuts would go to only the top 15 per cent of income earners.

The Treasurer's typical family man - the average wage earner with a wife and 2 children - pays a higher proportion of his income in tax under the McMahon Government than under any government in our history. The number of cents in each dollar earned which must be paid in tax was 2.9 in the last year of the Chifley Government. It was 10.3c in the dollar in the last year of the Menzies Government, 11.4c in the dollar in the last year of the Holt Government and 13.9c in the dollar in the last year of the Gorton Government. In the first year of the McMahon Government the average income earner paid IS. 8c in the dollar. That rate topped them all. He will now pay 14.1c in the dollar. In the McMahon years - in this year's Budget and in last year's Budget - the Australian wage earner is paying tax at the highest rate ever levied by any government in our history. The relief which the Treasurer purported to produce last Tuesday is real only in terms of the excess for which he was responsible last year. The taxpayer will not pay less tax. His tax increase is a bit lower than it would have been if nothing had been done. As any child knows, the remaining money that goes to the people who have the responsibilities buys less under the McMahon Government than under any other government in our history.

The Treasurer spent much of his time talking about percentage tax cuts. Let us look at what is important - the absolute value in dollars and cents of these cuts to the taxpayer. I have assumed in these figures that the wage earner has a wife and 2 children. I intend to cite a few figures because of the falsehood that is going around about what is a middle class taxpayer, a high class taxpayer and a low class taxpayer. The figures are most revealing and almost unbelievable, but they are correct because they are taken from official documents. Forty-two per cent of taxpay ers get $64 or less a week. The wage earner on $64 a week will pay $1.45 a week less in tax. Fifty-one per cent of taxpayers get $74 or less a week. A man on that income will pay $1.80 a week less in tax. Sixty-eight per cent of taxpayers get $93 or less a week. A man on that income will pay $2.35 a week less in tax. Ninetyone per cent of taxpayers get $147 or less a week. A man on $147 a week will pay $4.05 a week less in tax. Ninety-seven per cent of taxpayers get $200 or less a week. A man on that income will pay $5.75 a week less in tax. A salary of $200 a week is the equivalent of about $10,000 a year. Honourable senators will remember when with much publicity the Gorton Government gave a flat rate tax cut and heralded to the world that it had improved conditions for the lower and middle income earners. The fact was that people were glibly talking about $10,000 a year as being the middle to lower income. In fact, 97 per cent of wage earners are receiving less than that. These figures show that the much vaunted restructuring amounts to little more than tinkering with an outdated tax scale.

I quote from a paper that was distributed by the Treasurer with the Budget Papers. It is headed 'Income Tax on Individuals'. I take it that it seeks to emphasise his generosity. The first page shows the position of those people with an actual income of $67 a week. One of the 3 cases that is shown is a taxpayer with a dependent wife and 4 dependent children. He will receive a deduction, but the significant thing is that the same document shows that this person on $67 a week actual income with a dependent wife and 4 dependent children is still paying $4 a week into the Government coffers. Who would argue when I put forward the proposition that such an individual with those responsibilities should be paying nothing a week in taxation? The next page shows the case of a man on $67 a week with a dependent wife and 4 dependent children but with an additional expenditure of $500 a year which is shown in concessional deductions. That sum would not be for hospitalisation because most money spent in that way is paid back by hospital benefit funds, so it would be spent on things such as dentists, schooling and that type of thing. He is still paying $2.50 a week in tax. How can any government argue that a young man with a dependent wife and 4 dependent children going through the most expensive time of his life and having to pay another $500 unavoidable expenditure during the year because of misfortunes, should still be taxed at the rate of $2.50 a week? Obviously that is the sort of person who should be exempt completely. His time for paying tax is when the children are off his hands and when his responsibilities are not so great. These figures make it clear that the Budget is a rich man's budget.

The increase in the dependant's allowance of $52 a year is also a measure which favours the rich. Why should the wife of a rich man be much more valuable to him in terms of tax concessions than the wife of a poor man?. The man who is paying 65c in the dollar in tax will be relieved of paying 52 multiplied by 65c. The man paying only 10c in the dollar in tax will be relieved of paying 52 multiplied by 10c. If a man has had a period of unemployment during the year and if in that year he does not pay any taxation, the relief that the Government is giving him in 52 multiplied by nothing, which is still nothing. Having shown that a minority of taxpayers - the rich ones - receive the majority of the money which the Budget hands out, let us examine the claim of the Treasurer about his income tax cuts. He said: a reduction in personal income tax will put more money directly into the hands of consumers. Their take-home pay and their capacity to spend will be enhanced. There will be a real lift to community and business psychology. The Treasurer talks of the capacity to spend. He said nothing about the inclination to spend. On recent performance, those with above average incomes - remember that these are the people getting the lion's share of the tax handouts - will bank their tax cuts. I refer to the higher income earner. Where is the stimulation that the economy needs. Where will be those extra jobs needed to combat unemployment? In economic terms the Treasurer has chosen the worst possible means to stimulate the economy.

A number of courses were open to him. He could have reduced the rates of sales tax, thereby reducing prices and making a significant assault on inflation. Honourable senators will remember that he did make one sales tax concession, that is, on works of art. If a person wants to buy a Rembrandt he will be relieved of paying sales tax on it, but if he wants to buy an exercise book he will have to pay sales tax on it. So the budding Rembrandts in the early stages of their development will be paying tax to learn their trade, as will any other cihld who wants to start learning any trade. It is most difficult to find why this concession was selected when such things as exercise books are still on sales tax lists.

The Treasurer could and should have announced a major programme of Commonwealth financed capital works to build desperately needed schools and. hospitals. Such a programme would have been a direct assault on the high level of unemployment and, incidentally, a contribution to those neglected twins - health and education. He could have, given a much larger portion of his handouts to the . recipients of social services. He need then not have worried about the money being held .out of circulation. It is notorious that, under this Government the aged, the invalid and the unemployed must spend their pensions immediately. They can hardly afford to accumulate large bank accounts. The Treasurer did none of these things. He chose the most inefficient -means of stimulating a sick economy. He made his income, tax cuts with no control, over whether the . money would be spent. Why? The answer is stark and clear. Because he believed that a large income tax cut would be electorally popular.

Before leaving the subject of unemployment let' me say several things about one of the other factors which has considerable bearing on the number- of. people out of work. That factor is immigration. Last year 132,000 migrants came .to Australia. This figure compared with an original target of about 170,000. The level

The latest available figures show that of those migrants eligible to enter the work force 11 per cent of arrivals during the previous 12 months were unemployed. Is this a fair go for these migrants? Is it a fair go for the Australians who jostle with them in ever longer job queues? The answer is that the Government is not interested in migrants as people. It has become mesmerised by the numbers game of migration. More is better says the Government. If it believes that the more migrants unemployed the better then let it say so. The 1972-73 immigration target provides the best possible evidence that the Government has totally abandoned the policy of full employment. It is replacing this policy with one of maintaining a significant and permanent pool of unemployed. If a disproportionate number of those in the pool are migrants, reasons the Government, so much the better. They are less able to be vocal and do not have the vote. The high unemployment amongst migrants in fact encourages them to vote in the only way open to them. They vote with their feet. At present rates, one in every four migrants arriving in Australia will leave Australia permanently. This trend can only increase if present Government policy is pursued.

Let me now turn to the other area where the Treasurer was at his proudest. I refer to social services. The main provision was for the standard rate of pension to be increased by $1.75 to $20 a week. We welcome the rise. It is a move in the right direction - but it is not enough when compared to other things in Australia. The Government has retained the concept of pensions being arbitrarily fixed at the whim of the Government. In practice, this means bigger rises in election years and smaller rises at other times. Inevitably the pensioner under this system is the victim of inflation. His rises always lag behind price rises. The current high rate of inflation leaves most pensioners helpless.

The Australian Labor Party is pledged to tie social security payments to average weekly earnings. This allows pensioners automatically to receive increases either as productivity increases, as other factors increase - general prosperity - or as inflation occurs. The ALP would fix pensions at 25 per cent of the average weekly earnings which, at the present rate, would be $24.50 a week. Of course, as I have already explained the figure would be adjusted automatically. There is a hint in the Budget that at long last the government may be steeling itself to think about the unthinkable. I refer to a national superannuation scheme. There was also the promise to abolish the means test within 3 years. The Australian Labor Party has been campaigning since 1954 for the abolition of the means test. Until less than 6 weeks ago the Liberal Party was opposed to the abolition of the means test.

The Government now proposes, and I quote:

To appoint a committee of inquiry to examine and report on these matters and on how this proposal may be responsibly financed with particular reference to national superannuation.

After 23 years and a history going back to 1948 - at one stage, Mr Menzies resigned from a Ministry because of this subject - the Government has set up a committee to inquire into it. Thus the promise to abolish the means test is to rest on the report of an as yet unnamed, memberless and bud.getless committee. It is well to remember that the Australian Labor Party has moved in Parliament on no fewer than 5 separate occasions for the establishment of a committee to inquire into a national superannuation scheme. On every occasion the Government defeated the move. Is its sudden conversion the product of sincerity or panic?

What impact will the Budget make on poverty? The increase in pensions and the retapering of the means test may for a few dizzy months push some people temporarily above the poverty line. Just as surely, inflation will inexorably drag them back under that line. What of the people on unemployment benefit? These are the growing band of luckless poor deprived of the chance to earn a livelihood by Mr Snedden's first Budget. Their base rate of benefit - the dole - stays fixed at $17 a week. Budget expenditure on this item is to increase from $44.7m last year to $57.6m this year which strongly implies that the Department of Social Services believes that hard-core unemployment will persist at its present record level.

The Government offers no plan to deal with poverty. It is accepted by the Government as a normal part of our society, just as the new permanent pool of unemployed is now to be accepted. Where is the assistance for large families on low incomes? Child endowment remains unaltered and therefore stands further eroded by inflation. Another measure which deserves comment is the liberalisation of gift duty which is another handout to the rich. One most welcome measure is the deductibility of expenditure by a taxpayer on his own education. This measure is long overdue - 23 years overdue - and the high importance that the Treasurer claims he attaches to this matter is hardly commensurate with the speed with which the measure has been introduced.

The levying of excise on liquefied petroleum or other gas used to propel road vehicles is a retrograde step and shows that the Government pays no more than the most hypocritical lip service to the problems of air pollution. The Ministers of the Environment in both South Australia and New South Wales have already protested about the imposition of this excise. It falls as a bitter blow on those enterprises which, in the interests of reducing exhaust pollution from their vehicles, have fitted them to burn liquid petroleum gas. I understand that a joint approach is to be made by certain State Ministers for the Federal Government to remove this excise and I trust the Minister will reconsider this matter. I urge him to do so.

The Government proposes to increase expenditure on defence from $1,21 7m last year to $ 1,323m this year. Included in that figure is the first instalment of $355m on 3 destroyers known as DDLs. If the past performance of this Government is any guide, orders for expensive and flashy defence hardware, placed immediately prior to an election, can lead to an extended financial hangover which persists long after the electoral purpose of the orders has been completed. There is reason to believe that the initials DDL may soon become as notorious as the designation Fill.

The greatest fault of the Budget is inherent in the fact that it is an instrument of political expedience. Expedience is concerned with short term measures and the short term in this case is the 3-month period - less, I hope - between now and the Federal election. There is no long term planning in this Budget. People have a right to expect more of a Treasurer than ad hockery and handouts. Planning is required to solve present crises and avoid future ones.

Where in this Budget is the long term plan to control inflation? The Reserve Bank believes that revaluation of the Australian dollar is necessary, but where is there a word of this, either for or against? The inflow of overseas capital continues unabated, and where is there word of government controls? Where is there any indication of any attempt to regulate prices? This Government has always believed in controls on wages, but even in this period of galloping inflation it refuses to admit that effective control of inflation requires some control over prices. The Treasurer's view of inflation is simple - it is easy to understand; in fact it is simplistic. It is: Pressures for more frequent and everlarger increases in money wages remain. While they do the evils of inflation will persist'. There is no prescription here for a cure, only the implication that what is needed is an eternal wage freeze. Do that, according to the Treasurer, and inflation falls into place. Clearly a Treasurer with such an unreal view of inflation is unfit to manage our complex economy.

One great problem that the Budget leaves completely untouched is the needs of Australia's cities and the commensurate need for decentralisation. This, of all problems, requires long term planning. As the countryside is steadily depopulated and the cities swell to choking point, the present Government is content to sit idly by, disclaiming responsibility. Yet only massive intervention on a scale that can be financed and directed by the Commonwealth will halt the present trend and arrest the deterioration of city environments and the worsening quality of life for their inhabitants. Regional development and the setting up of large, viable regional centres in the countryside, which must be the cornerstone of any realistic decentralisation policy, will also require Commonwealth assistance. This Budget says not one word about these matters. By its silence it delays an attack on these great problems for at least 6 months and perhaps a year. The cry has always been that we could not afford decentralisation. To be realistic, now we cannot afford not to have decentralisation. Surely no-one wants to pass on to those who follow us the type of life that has to be lived in cities such as Tokyo and New York. There is one thing that this generation can do more than any other - and that is to certainly cure some of these evils in the interests of the people who will follow us.

Where are the plans to control foreign investment and the takeover of Australian assets and companies? The Treasurer is apparently happy to 'Sell off a bit of the farm, year by year' as Sir John McEwen described the process. One can only wonder whether the Treasurer realises how much of the farm actually remains in our own hands for us to be able to sell. Where are the plans for a comprehensive scheme of rural reconstruction, with generous retraining schemes where necessary to end once and for all the debt-ridden, handtomouth existence which is the miserable lot of too many of our primary producers? The Australian Country Party tradition of ad hoc handouts, indiscriminate subsidies and hurried relief operations persists in this Budget and one looks in vain for considered planning and modern rural management policies.

Where is the review of health insurance in this Budget? With adherence by doctors to the common fee continually declining and with some of the large health funds accumulating reserves against the wish of the Government and beyond the control of their contributors, where are the proposals for a new and equitable health scheme that will bring medical and hospital treatment to the ordinary citizen at a reasonable cost? The Budget is silent. Fear of illness will still continue to haunt the average wage-earner. The Government parties have long posed as the guardians of stability and responsibility in economic management. Last year the Treasurer predicted an overall growth rate for the economy of 5 per cent; the result was an appallingly low 3 per cent. This year the Treasurer has again predicted a growth rate of 5 per cent, but there seems no guarantee that this year the performance will be closer to the promise than it was last year.

One of the quaintest and cleverest, but at the same time disturbingly accurate, descriptions of the Budget was 'a preelection fireworks display - but with live ammunition'. Let us hope it does not blow up in our faces. Nothing in this Budget suggests that cost inflation will cool down. Prices totally unrelated to capital cost increases will keep rising. Rent and land, for instance - 2 major costs to the Treasurer's 'typical suburban family man' - will continue to rise unchecked. The economy's serious inflationary psychology will not disappear overnight - if at all - by waving a magic wand of false tax deductions. The Government cry of 'taxes down, pensions up, and particular help to the family man' is deliberate political deceit and economic dishonesty.

Earlier I said that there were a couple of areas of immediate gain to depressed sectors of our population in this Budget. I said that at the same time there were many crucial gaps in the Budget which pose serious questions. Let me ask them now. Where is there any review of the value of the Australian dollar or an indication of how exchange rates could be used as an instrument of economic policy? Where are the visible, workable stimuli to productivity? Where is there worthwhile policy on the ownership of national resources and their associated industries? What is the Government planning as a way to mop up our dangerously excessive foreign reserves? Where is there any indication of a new philosophy and approach to social welfare? Where is there any suggestion that the Government ever appreciates the need for a review of Federal-State financial relations? Where is the attack on rampant land prices?

I think that the people of Australia should beware of Treasurers so ostentatiously bearing gifts immediately prior to an election. They would be wise to ponder whether there was any deeper significance in the phrases which concluded the Budget Speech in which the Treasurer said:

Of course any Budget can only be framed on the basis of the Government's best judgment at that time. What the future holds can always be only dimly seen. We shall review economic trends as the year goes on to eusure that the economy moves properly towards its sustainable growth path.

Later he went on to say:

I think it right to inject this cautionary note. But tonight I shall not dwell on it further.

In other words, enjoy the Treasurer's gifts today for who knows what the Liberal Government might do tomorrow - that is, after the election. Certainly the Treasurer did not want to dwell on it on Budget night. What I suggest is that many Australians might dwell on it before election night. Their conclusion, I am sure, will be that it is time to dismiss the stop-go Treasurer and that it is time to bring purpose and planning into the management of the Australian economy. In other words, it is time to elect a Labor government.

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